
Free Money: The Surprising Effects of a Basic Income Supplied by Government - stevekemp
https://www.wired.com/story/free-money-the-surprising-effects-of-a-basic-income-supplied-by-government/amp
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Simulacra
This is very interesting, but is it not also worth noting that the community
allowed this money is very controlled? The idea of a basic income is that
everyone gets it, regardless of where you live in the country, and other
factors. My problem with basic income is that once you start, there will
always be a demand to increase it, and enormous political pressure to increase
it, along with people from all over the world wanting into the system. For a
small population of native Americans, it seems to work very very well, but I
don't think it's sustainable for an entire country.

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frgtpsswrdlame
>My problem with basic income is that once you start, there will always be a
demand to increase it, and enormous political pressure to increase it

How is this a problem? If enough people support an increase in the UBI that
politicians feel they have to raise it, isn't that a good thing?

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colemannugent
When do you stop raising it?

If people could vote themselves more money the voter turnout would be insane.
How would anyone control something like that? Anyone who ran against the
increases would be easily defeated with something like this: "My opponent
wants to take the money you deserve!".

At some point you would be giving people more money than you produce as a
country and then it's only a matter of time until the money runs out. Once the
money runs out then your government will evaporate as the enraged populace
tries to pin the blame on one group.

This of course is on of the central issues with government run wealth
redistribution programs, nobody wants less money and they will go to the polls
to protect it. Whatever you think of the ACA/Obamacare in the US, once it got
established and started paying out there is almost no way to repeal it as no
one wants to lose their benefits. Even establishment Republicans learned their
lesson and are now leaving it alone after seeing that they angered many
Americans who enjoyed those benefits and threatened their chances of being re-
elected.

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frgtpsswrdlame
>If people could vote themselves more money the voter turnout would be insane.
How would anyone control something like that? Anyone who ran against the
increases would be easily defeated with something like this: "My opponent
wants to take the money you deserve!".

Yeah, that seems mostly fine to me though (aside from the rhetoric.) If an
increase in UBI makes life meaningfully better for enough people and they turn
out to increase it that seems like democracy in action.

>At some point you would be giving people more money than you produce as a
country and then it's only a matter of time until the money runs out. Once the
money runs out then your government will evaporate as the enraged populace
tries to pin the blame on one group.

Seems pretty hyperbolic.

~~~
colemannugent
I apologize for the hyperbolic tone of my earlier post, I meant to approach
this from more of a thermodynamic angle, ie. money in versus money out.

You cannot continually raise the UBI, as this is economically untenable,
however there will be significant pressure to raise it every time there is a
vote. I haven't seen any UBI proposal that addresses this.

Plus there is another real issue with a true UBI: inflation. If everyone in
the US made $100,000 a year then an iPhone would cost $8000 instead of $800 as
people could afford to pay more and Apple would adjust their price
accordingly. How do existing UBI schemes plan to avoid this?

~~~
vec
A UBI scheme can't just create value from thin air; it has to come from either
taxes or from devaluing the currency by printing more, which is basically a
tax by another name.* Given that fact, there must be at least some class of
relatively wealthy people who come out worse off, even after their UBI checks.
The bigger the check, the larger that class of people. Since those people
aren't idiots, they'll apply political counterpressure against raising the
rate.

Because there's still the same total amount of money in the system, (inflation
adjusted) prices can't go up too much. According to the Econ 101 model, goods
with a fixed supply will probably get more expensive since there are more
potential customers wanting the same amount of stuff, but goods with an
extremely flexible supply will get cheaper, again, because there are more
potential customers to spread the fixed costs over.

* There's also a sort-of-UBI variant where the funds come from monetizing some big nationalized resource and distributing the proceeds (e.g. the Alaska Permanent Fund Dividend). In that case the above doesn't apply, but neither does your fear. Since in that case the pool of money is dictated by the market value of the resource the voters can't directly impact how much they'll receive.

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Hasz
I'd like to see a version of "basic employment".

Can't find a job? The government will guarantee you some baseline pay and give
you a job and healthcare benefits almost unilaterally. You've still gotta show
up and do your work, but you are guaranteed something to do.

It might be cleaning up roads and parks, building trails, washing streets, and
planting trees, but it's a basic job that will provide you with enough money
to get by.

There would be career counseling, skills-based training, and opportunities to
manage other workers. Essentially, an Army without the guns; a group focused
on not only improving the public environment, but also the part of the public
employed by the program.

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gregman1
One day we'll discover socialism.

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Hasz
The USA had the WPA, which did something akin to my proposal. Its budget was
1.3bn in 1935 (23.5bn in 2017), and relative to the US military expenditure
(521bn in 2016), it's just not that much money for an incredible amount of
public good.

Wikipedia has an excellent page about what the WPA administration accomplished
over 8 years -- I think it's an idea worth reviving.

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dragonwriter
The WPA was an reasonable countercyclical government response to a massive
cyclical downturn in private-sector employment.

That's not the problem UBI is intended to address, and the WPA would be an
exceedingly poor fit TO UBI’s problem.

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evo_9
Main take-away summarized in the closing paragraph:

"...if anything is to be learned from the Cherokee experiment, it’s this: To
imagine that a basic income, or something like it, would suddenly satisfy the
disillusioned, out-of-work Rust Belt worker is as wrongheaded as imagining it
would do no good at all, or drive people to stop working. There is a third
possibility: that an infusion of cash into struggling households would lift up
the youth in those households in all the subtle but still meaningful ways
Costello has observed over the years, until finally, when they come of age,
they are better prepared for the brave new world of work, whether the robots
are coming or not."

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gooseus
I can't help but think that UBI is the modern grain dole[0] and while it
sounds like a great idea on the surface and would probably work out great for
a number of individuals in the short run... it will also inevitably lead to
the use of UBI as an easy political tool for populist leaders to use to come
to power, leading to the a further degradation of the republic.

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

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tareqak
Doesn't that mean that non-populist politicians should get together and
actually implement some form of effective UBI to head off a dangerous and
competent populist?

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trendia
That sounds a lot like Otto von Bismarck [0] . Fearful of the socialists, he
tried banning them, but that didn't work. So, instead, he introduced
"Soclialism-lite" with improved worker conditions, social benefits, and semi-
public medicine.

[0]
[https://en.wikipedia.org/wiki/State_Socialism_(Germany)](https://en.wikipedia.org/wiki/State_Socialism_\(Germany\))

~~~
RobertoG
So, socialism (the fear of) improved the live of those people. Sounds like a
good deal.

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runeks
The fundamental issue with a basic income, as I see it, is that it's
impossible to guarantee, since the revenue, out of which basic income is paid,
comes from taxes. This makes it impossible to know how much money the
government will have to pay out a basic income next year. So a family that has
gotten used to, say, $15,000 in basic income one year, may only get half of
that the next year, because government can't predict its tax income for the
next year.

Add to this the fact that basic income takes away, at least some of, the
reason to work in the first place, which means that the very foundation of
governments paying out basic incomes -- income from taxation -- is affected by
paying out basic income. The result is an unstable system with feedback loops,
where paying out a lot of basic income one year results in fewer taxes the
next year, which means the government has less money to pay out in basic
income that year, causing people to need to a job, which increases taxes the
next year, after which the government can pay out more in basic income.
Predicting this oscillation is essential to making basic income work, and I'm
not confident it's possible at all, at least not when we need to be as sure
about it as we do when we're talking about money that people need to buy food.

~~~
jknz
This criticism also applies to unemployment benefits in western European
countries. If a large chunk of the population suddenly becomes unemployed,
then the gov has less tax revenue but more employment benefits to cover.
Unemployment benefits cannot be guaranteed without either expanding the
national debt or printing money.

A sane government behavior would be to spend in year n the known tax revenue
of year (n-1), and nothing more.

~~~
ZeroGravitas
And this is in fact sometimes suggested as one of the key benefits. If an area
suddently has a lot of people out of work with no safety net it causes a
ripple effect as they curtail their spending massively at local businesses,
and the next domino gets toppled.

With unemployment benefit the goverment automatically injects cash into the
area to forstall this outcome.

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gumby
The bigger problem in my mind is people getting past the Industrial Age idea
that you need a "job" to be a worthwhile human being, and that the nature of
said "job" determines your value to society.

I don't really mind if there's lots of crappy poetry and tremendous non-
enumerative attention to child rearing and looking after the elderly. I don't
mind in the slightest if someone decides they just want to watch TV all day à
la "Fahrenheit 451".

But in an abundance economy where the marginal cost of production is
essentially nil and money is more useful as a signalling mechanism rather than
a store of value, it's the mindset that will be most psychologically
dangerous.

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11thEarlOfMar
Whether statistically significant or not, this provides a ray of hope that
some of the benefits proponents foresee will be realized and many of the
concerns that opponents foresee may not be, respectively, improved outcome for
families, versus, reduced participation in the work force:

"Before the casino opened, Costello found that poor children scored twice as
high as those who were not poor for symptoms of psychiatric disorders. But
after the casino opened, the children whose families’ income rose above the
poverty rate showed a 40 percent decrease in behavioral problems. Just four
years after the casino opened, they were, behaviorally at least, no different
from the kids who had never been poor at all. By the time the youngest cohort
of children was at least 21, she found something else: The younger the
Cherokee children were when the casino opened, the better they fared compared
to the older Cherokee children and to rural whites. This was true for
emotional and behavioral problems as well as drug and alcohol addiction....
Other researchers have used Costello’s data to look at different effects of
the casino payments. One fear about basic income is that people will be
content living on their subsidies and stop working. But a 2010 analysis of the
data, led by Randall Akee, who researches labor economics at the UCLA's Luskin
School of Public Affairs, found no impact on overall labor participation."

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empath75
It's pretty remarkable that money apparently cures psychiatric disorders.
Maybe we should be prescribing cash instead of ritalin to kids with ADD.

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11thEarlOfMar
It's about family dynamics. Parents who can focus on providing for and raising
their kids will have a better outcome than those those that struggle to put
food on the table. If the parents have hope and a means to deliver, the whole
outlook of the kids changes from a life of coping with hopelessness to looking
towards a future that they have influence over.

~~~
empath75
I was more making a statement about how those kinds of disorders are over
treated with medication when a change in the home environment would make a
bigger difference.

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ytNumbers
I can see how basic income could help some types of people, but it can also
hurt other types of people. If only there was a way to determine who it would
help/hurt, and then to only give it out when it would actually help.

[https://ifstudies.org/blog/what-can-we-learn-from-native-
ame...](https://ifstudies.org/blog/what-can-we-learn-from-native-americans-
about-a-universal-basic-income)

~~~
mikeash
Extrapolating from the experience of people who were genocided, displaced,
systematically oppressed, and excluded from productive economic activity
strikes me as likely to be inaccurate.

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alacombe
Basic income based on other's addictions ? I doubt people around here would
welcome drug money being redistributed to a close community distinguishing
itself from outsiders by blood, but somehow, this is acceptable.

That being said, there is an easy counter argument to this article: Canada's
"first nation". They receives millions in government funding which ends up to
be redistributed arbitrarily by "band chief's", often in the pocket of their
own direct family. It is not uncommon to have their income in the seven
figures while other members of their band fall to real vice, drugs and
drinking. (facts confirmed by many first nation members when I living on
treaty land). Also, it is not uncommon to see natives who tried to integrate
with Canadian society being ostracized by their own community and seen as
"traitors" (once again, step family experience).

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dsfyu404ed
This (and every other article I've read) fails to address how "universal"
basic income would result in something other than a proportionate increase in
the cost of living.

I don't want my taxes pissed away into some slumlord's bank account any more
than I want them pissed away on APCs for a small town police department.

~~~
learc83
Assuming you believe free markets work (and assuming the UBI is paid for by
tax increases instead of just printing more money), the answer to "how
universal basic income would result in something other than a proportionate
increase in the cost of living" is: that's not how markets work.

Increased demand will result in increased supply except in markets/locations
where the supply can't increase.

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RickJWag
Facebook and Google should expand the experiment and provide a basic living
wage to everyone in San Francisco.

It'll be interesting to see what happens to the homeless population.

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PatientTrades
Universal basic income is already a thing in America. Free food stamps, free
public housing, free k-12 education, free government provided cellphones, free
wifi, etc. "Universal basic cash" is what this article is about. No, I don't
think its a good idea to give people cold hard cash for basic income

