I still haven't seen a good explanation for how UBI on a truly universal scale isn't going to just raise housing prices to capture the surplus. I mean, if my landlord knew I (and anybody else who could theoretically live in my apartment) had a spare $2000/month, forever, I'm pretty sure he'd want it.
That's always been what I wondered as well. UBI solves everything, except for the part where an actor who knows explicitly that all of his tenants will be getting a flat amount per month, then why not raise prices to capture some of that as well? Why wouldn't everything just increase in price slightly, everyone can afford a little bit more now.
These are really excellent points I hadn’t considered.
On the other hand, let’s run the experiment the other way. We currently have significant numbers of people working with no hope of financial stability in their future. Will taxing them to fill the coffers of the rich improve their situation? Given the current situation of increasing wealth inequality seemingly exacerbating existing problems, I can’t imagine that this is a promising approach.
Since UBI is essentially the most generalized form of a benefits program, I really have to hope that it works. If it doesn’t, that seems damning to other benefits programs which are inefficiently (and IMO ineffectively, due to perverse incentives) means-tested. If it doesn’t, and if anti-UBI is virtually axiomatically a bad idea, then I’m not sure what’s left.
We really do need to be building a lot of stuff, and or fixing stuff we have already done. That work is a direct stimulus, can pay pretty well, and benefits everyone public and private alike. Additionally, the returns from it can pay down all of the expensive bombs and non returned items that we currently spend or have spent on. An example is the interstate highway project. Our current president once the toll that, which is really stupid, but similar kinds of projects will deliver similar kinds of returns. The interstate highway project is still paying us great dividends years and years after it was created. Last figure I knew was 6/8 maybe 10 times the dollar spent.
The post office still getting a lot of bad press right now, is actually exemplary and its performance in return to the public. It is entirely self-funded, doesn't take any tax dollars at all, pays good wages, has a lot of value to the public, and the benefits are worth working there.
Other self-funded public works could work the very same way. Those that use it pay for it, and we all will benefit from the economic development. An example might beat networks, another example might be first line Healthcare, there are many to choose from.
One that I've been thinking about lately is energy. Well distributed public investments in energy of all forms, managed on a higher level through something like a post office, might really pay us off, and deliver a lot of options making energy competitive and well distributed.
The key thing to understanding all of this is government has agency, it's for us, by us, and we need to employ it to our mutual good. Yes, this will compete with Private Industry, but they should be competed with, otherwise they'll accumulate wealth stuff in the bank, and complain about the lack of opportunities to invest and make returns. There's nothing wrong with any of that, but it's a stalemate. One we don't need.
I knocked this out really quick on Google Voice. I apologize in advance if this is a bit of a mess. Hopefully the gist comes through.
Are you saying that every $1 spent on UBI is expected to return $X > 1 and that $X > $Y (where $Y is the return on current social service programs)? If so, I would say [citation needed], but, if proven, that would be a great argument for UBI.
I don't think UBI delivers much of a return at all, when compared to public works and more direct investment in the people.
I do not mean the current social service programs. I mean new, improved ones, along with Public Works people building things of real value that will deliver real returns for very long periods of time.
A very large UBI could. But there's no way that's ever going to happen.
I'm focused specifically on housing because approximately everybody needs somewhere to live. That ought to raise purchase prices and rent prices. In effect, it would mean anyone who bought before UBI raised the price would be subsidized by those who buy or rent afterward.
It seems like roughly the same economics as rent control: if I, as a landlord, own rent controlled units, then I want to make as much money off them as if they were not rent controlled. Unless I can get them reclassified, the only way to do so is to raise the monthly price so that over the course of an average tenancy, the numbers add up to what I could have rented the unit for without rent control. What you end up with is effectively a Ponzi scheme.
This is not true. UBI doesn't create money out of nowhere. It redistributes existing money. Poor people can afford more, and rich people can afford less, because taxes increase.
Rich people spend less relative to their wealth and income than poor people do. That means more people are going to be buying more things, increasing demand, which... raises prices.
Sure, the same is true of anything that increases the incomes of poor people. There's no reason to believe that the price increase would cancel out the entire benefit of UBI.
I'd presume defenders would say, because with the increased purchasing power at hand, there would be more incentive for developers to build. When instead the money is squandered through public housing, homeless shelters, halfway houses, and other intermediaries, the housing is slow to be built, with low accountability for either landlord or tenant to get and receive their value.
That is not how any market works. Just because your customers have more money does not change the supply or demand for your product. A luxury apartment fetches a high price because there is demand from tenants willing to pay the luxury price. No one is going to pay more for the same apartment unless there is more demand for apartments than there is supply like you have in NYC and SF. More income causes prices to rise because people start outbidding each other for everything. Why sell your house for 100k when someone else is offering 120k
This is exactly how the market works and will continue to as long as humans are involved.
First hand experience here that seems to escape the engineering brethren that have never glimpsed into sales: The same exact product is sold to every customer at a different price. Yes sometimes there is a higher demand which might push price a tad but most of the time there is not. I always enjoy when people on HN complain that so-and-so doesn't publish pricing on their website. Of course not, because then they would lower their revenue. It also removes leverage, sometimes it makes sense to sell something at a lower cost today to negotiate some terms, and then down the road either sell at volume or raise the price. Sometimes you just like someone and give them a discount. Oh its the government? Yea raise the price a LOT. etc etc.
You should see how the rent goes up in military towns every time our BAH goes up. If everyone knows the tenants are receiving more money the general price for rents will tend to go up.
This might be the unintended consequences of a wage/ price spiral.
If I remember correctly, there's no benefit to the soldier involved if they choose an apartment that only costs half of the Basic Allowance for Housing - they don't get to keep the surplus.
No, they get to keep any left over money...if there is any. One way owners can somewhat control who can rent property is by raising the rent to the point that it is unaffordable to junior enlisted servicemen.
Of course your customers having more money means that businesses will try to capture that excess, that's the foundation of price discrimination. The whole concept of coupons is that some customers with more money won't care enough about the price difference, so they'll ignore the coupons and pay full retail price while more price sensitive customers will use the coupon and pay less.
Look up Henry George and the Single Tax: the tax on economic rents. Land ownership, intellectual property, and so on are taxed.
This was pitched as an alternative to income taxes, which deincentivie labor and reduce income and thus the ability for people to be self-reliant instead of dependent on charity or government programs, and sales taxes, which fall disproportionately on poorer people who have to spend a larger share of their income on basic needs. Even Milton Friedman, no friend of taxes, thought if George’s Single Tax proposal as “the least worst tax,” because it would (theoretically) have the least depressing effect on economic growth.
Theoretically, your landlord could not raise rents to avoid their tax burden, as the increase in rent would directly correlate with their tax burden.
George also suggested that Single Tax revenues could provide for a UBI, although the size and scope of government was much smaller in 1880.
Speaking as a junior white-collar worker whose only significant capital is held in a retirement account, the idea of a tax on economic rents (and an assumed cut in my income/payroll/sales taxes) is very appealing, far more than a paltry UBI check each month.
The money in (real) UBI comes from somewhere, obviously. It's not like everyone just has more money. If you can already afford the basics then it's going to come out of your money in taxes to a greater or lesser degree. So for people in a normal middle income range you pay and then get the money back. Higher income people would pay more and get back the same as you. Low income people would pay little or nothing and get the same back as you.
How that actually plays out in a market like ours hasn't (can't) been fully tested, but it seems a promising idea.
Even if the money comes from somewhere, if a large percentage of the population suddenly has more money to spend then inflation happens. I've seen this happen every time the government of a certain Eastern European country decided to raise pensions, a large percentage of the population depends on those pensions. Every time they did that, inflation went up, so it only provided a temporary benefit to those people. But it's a cool electoral trick so it happened quite often.
Yes, the money has to come from somewhere, but the traditional form is that UBI distributions replace most or all other forms of social services. Right now, I'm paying out and receiving little or nothing back directly (and I am not arguing that I should -- I don't need, say, food stamps, or subsidized housing at the moment, but those programs should be there for those who do). Why wouldn't it be rational for my landlord to want my UBI money?
I think that if the government work to provide a lower UBI of say ~$750/month, healthcare, and also provide housing similar to military barracks available to everyone free of charge it would circumvent the instance increase in rent and would also provide an incentive for people to do some work.
> I still haven't seen a good explanation for how UBI on a truly universal scale isn't going to just raise housing prices to capture the surplus. I mean, if my landlord knew I (and anybody else who could theoretically live in my apartment) had a spare $2000/month, forever, I'm pretty sure he'd want it.
This is one of the reasons why a local UBI doesn't really work.
If you have a national UBI, people can move. That landlord may try to capture the surplus in California, but with a UBI you can simply move somewhere cheaper.
People in the middle class forget that simply moving is expensive and requires a remarkable amount of cash up front.
I don't really get this. If the surplus is efficiently captured (which markets are incredibly good at doing), how do these people come up with the cash to move?
I'm of the mind that UBI might work with the absolute minimum of amounts. Give enough for food, a bus pass, renting a room (not an entire apartment), and some for incidentals. It would basically be "stay out of trouble" money, from which people can physically live, which allows them to then go forth and pursue something societally beneficial, because you don't just want to stay at that level. In theory, this might make their income less available to predatory targeting.
However, with a looming jobs crisis, the assumption of being able to go out to earn more remains to be seen.
What if it's not spare? It's their only $2000/month so they're not going to pay that much for rent, and someone else will offer lower prices to get that money. These same people aren't tied to a job, so they can more easily move somewhere cheaper too.
What landlord would continue to rent an apartment out for $X when it's easily possible to rent it out for $X+2000 or $X+1500 (not capturing the whole surplus, but a majority of it, say)?
> when it's easily possible to rent it out for $X+2000
Just because somebody has an extra 2000 dollars in their pocket every month doesn't mean they can earmark all of that money for rent; they surely have other bills that they need to pay as well. If the apartment was rentable at $X+2000, then why wasn't the landlord renting it at that price before everybody got the extra cash from UBI? Why do you think that somebody would say "Yes, now that I'm getting an extra two thousand dollars a month, my apartment is definitely worth an extra two thousand dollars a month" instead of saying "welp, rent is too high here, guess I'll move to some place else that's charging closer to what I used to pay"?
Your only looking at one side of the market equation. Landlords have to compete for tenants as well. They can't just raise rent to whatever they want, they all compete with eachother. Only in markets that are severely supply constrained like the bay area where this wouldn't work. Also, in areas where new supply could easily be added, if more people have money, it will create new demand for housing and it will be built.
This is essentially the inflation argument and we have a lot of indicators that a UBI doesn't lead to significant inflation.
But it brings up the point that a UBI will not solve all of our problems. An extra $2000 a month doesn't help you if you don't have medical insurance and get a $500k bill from a terminal disease, for instance.
What a UBI does is removes a lot of bureaucracy around welfare for recurring costs (rent, clothes, food, gas, etc) and it addresses the scaling problem we're having with inequality. It's an imperfect solution, of course, but I haven't heard many other viable (by capitalist standards) options.
I disagree that this is the same as a simple inflation argument. If no new money is injected to pay for the program, we have the same amount of money paying for the same stuff, so no overall increase in prices.
Housing is special in that everybody needs to live somewhere, and you can't take it with you anywhere. If I want to work in a certain geographical area, I simply have to live near there as well. The vast majority of the population does not have the option of remote work.
Since landlords know this, they know that if they're not already offering subsidized housing, that their tenants can afford more, so they do the rational thing and raise prices.
Honestly asking - would it be a good thing or a bad thing if the major high cost of living areas like cities in the CA such San Francisco, Orange County, etc., were actually significantly funding UBI to people with a permanent address in a lower cost of living Central California city long term?
Interesting. It would be similar to this concept in American sports, where a team like the New York Yankees (the San Francisco housing market of baseball) can keep their economic advantage but has to pay a tax on it, the proceeds going to less-profligate teams so they can remain somewhat competitive:
I think removing red tape and allowing people to pay for things they need right now is an excellent way to speed people's recovery from poverty, but it needs nudges, and those nudges need to be informed by data and empirical evidence. We need to know what people are spending the money on so we know how to target the biggest problems as well as the corner cases.
If you know what the actual problems are and where the money needs to be spent, you don't need to give everyone $10,000. You may only need to give this person $2,000 for this thing, and this person $7,000 for that thing. Giving them all a lump sum is just inefficient, and does not address the myriad edge cases. Collecting data on spending could help provide efficiency.
Most of this has nothing to do with my comment and is unnecessarily emotional and partisan. UBI does need nudges, not because I'm objecting to how people spend the money, but because it is _inefficient_.
Do you want to raise people out of poverty? Great. How long would you like that to take? 100 years? 50? 20? 10? We don't have 100 trillion dollars just lying around, so we can't just give everyone a fortune _right now_. So it will take time for a UBI to have a lasting effect on society. If you don't want that to take 50 years, you have to try to be more efficient with that money, so that 50 years can maybe be shrunk down to 20 years, or even 10.
To reach better efficiency you need to be smarter about how you solve problems with the money. To do that you can look at how the money is spent, and help people to spend it in a wise way.
Some of those ways include financial literacy programs, help with getting into social programs, job training, hell even carpools. Sometimes it will be a more efficient health insurance plan, or tips on shopping or cooking. Maybe even investing some of the money in a savings program, or debt counseling. Some people may need more than the UBI, and some people may need less. This isn't a partisan judgmental thing, it's a simple fact that not everyone has the same financial problems. Maybe one person needs $2,000 a month, and maybe one person needs $50k right now. You don't know until you look at the bigger picture, and that requires data.
I'm not being partisan or lecturing people on what they need to spend and how. Everyone in the world could benefit from having their spending analyzed and having suggestions on how to be more efficient with their money. I'm saying that if you're doling out a fixed amount of cash, maybe you might want to do it as well as you can so it can have the greatest effect possible, rather than just throw cash at the wind and hope it sticks the right way (because a lot of the time it won't, because people have different needs, and inequality is not just economic)
I agree that racial politics is toxic, but racial politics is just one subset of identity politics. The left has “sown the wind” and they’re going to “reap the whirlwind.”
I feel like UBI is just a band-aid fix for all the real issues (in the US at least) that already have proven solutions in other parts of the world. Rather than giving people money, I'd prefer a higher tax rate for a single payer healthcare system. Reign in healthcare, pharma, and insurance companies. Put a cap on tuition increases, and fund education again. Slash the military budget. Cut down the red tape permitting insane zoning laws, and allow higher density housing where it is needed. Placing the onus of how to spend all this money on individuals might seem like a good idea, but if we instead invested that money in real, lasting, scalable solutions we'll be a lot better in the long run.
Another interesting theory was to create a resource based economy. One iteration of this idea was The Venus Project created by Jacque Fresco [0] whereby society would remove the need for a monetary system, as everything can be engineered in abundance.
Have any countries attempted such a big fundamental change?
> “The trolls I’ve been dealing with on social media and in real life have very racialized views of how this is going to work,” Mr. Tubbs said. “As the first black mayor of this city, it would be very dangerous if the only people to get this were black.”
> He wants to select participants who are most likely to spend their money wisely, generating stories of working poor people lifted by extra cash.
It wouldn't really be UBI, but still worthwhile data for programs with work requirements.
I'm rather fond of the idea of work based programs. For example, for every $1 of W2 income you earn you receive $1 bonus, up to a cap of say $7,500.
This boosts wages on the low end and strongly encourages employment. Funding this through income taxes and you won't have to kill off risky / low profit small business with local living wage requirements.
None of these "experiments" are. They all fail to simulate the biggest downfall of UBI which is that when you do it at scale, prices go up. It happens for all the same reasons that guaranteed student loans have driven up the cost of college in the past 30 years.
How would you structure that bonus if you get a promotion that takes you to 7,501? You would get an impressive pay cut. If you structure it like taxes where only the first 7.5k get doubled then a bunch of people that don't need it will also get free money making the program cost more.
You're right! That would be a major concern and an incredibly serious flaw in such a program.
Maybe the description could be parsed slightly differently? Some might read parent's description to be proposing a bonus on W2 income the a limit on the bonus only of $7,500. Thus an income greater than that receives the full bonus. The structural problem you have correctly identified thus does not arise!
So everyone is getting an extra $7,500, assuming they make at least that much? How isn't that just a tax credit on W2 taxes?
It would make sense to assume there is some cut off, and given how government cut offs work in the past, it would be reasonable to assume the cut off will be implemented in a fashion that creates a graph where sometimes raises will result in less pay, at least when combined with existing government aid programs.
> So everyone is getting an extra $7,500, assuming they make at least that much? How isn't that just a tax credit on W2 taxes?
Depends how it's implemented, probably. People react differently to larger paychecks and tax refunds, for example. And certainly people react differently if you call it a bonus, even if it is just a negative income tax that would please Friedman.
> It would make sense to assume there is some cut off, and given how government cut offs work in the past, it would be reasonable to assume the cut off will be implemented in a fashion that creates a graph where sometimes raises will result in less pay, at least when combined with existing government aid programs.
That's a completely, fully, absolutely 100% reasonable comment on how poorly implemented current government aid programs are far too often implemented.
It might be a slightly less reasonable comment on the details as written of the proposition above.
>It might be a slightly less reasonable comment on the details as written of the proposition above.
The more I think about it, the harder I think it is to create a program which doesn't result in this once combined with other programs. Any cutback, no matter how small, will be combined with all other cutbacks of all other programs, existing and future. As long as these benefits are independent, there is a that the sum of all the cutbacks will outweigh the raise that caused the cutbacks. Even if the max cutback was 10%, meaning it would take a 75k raise to remove all benefits, when combined with 9 other equally generous benefit programs and income tax you still end up with a loss.
When adjusting for the phase out being for optics limiting how the phase out works (as all phase outs for optics would tend to look similar to meet similar expectations), the risk of a raise resulting in lost total income isn't easily dismissed.
You're right! That's a very real risk that should not be readily dismissed.
This is why a program that at no point has any way, shape, form, or manner of phase-out is desirable. It fully and completely avoids any kind of problem stemming from colliding cutbacks. This is such a good idea and so wise, that it was baked in to the approach proposed above!
In a sibling comment chain the one who purposed the idea mentioned that a phase out might be needed for optics.
But if it doesn't ever phase out, it is really just a tax cut, and to be exact a tax cut. I'll take having to pay 7.5k less taxes (or getting an untaxed check for 7.5k from the same people I have to write my tax check to).
You're absolutely right. It really is just a tax cut.
However, what you call something and how you structure impacts how people react to it. Call it wages and spread it over time and people react one way. Call it a bonus and hand it out once a year and people behave differently. So while it may be more correct to call it a negative income tax, this may work against the intended economic effects.
I should clarify too the bonus should be paid along side W2 earnings as steadily as possible, not at the end of the year. End of year refunds / cash don’t help pay rent and groceries in June.
The graph need not ever result in less pay, but Your rate per hour would decrease after the cap is earned out.
Somewhat harebrained perhaps, I like Friedman’s negative income tax but also want to encourage both employment and small business growth.
You’re right, that’s what I meant but said poorly. It’s a bonus on the first $7,500, not a tax credit. If you only make $10k / yr you aren’t paying any taxes anyway.
If you’re making 500k, the income bracket increase used to fund the program would cost far more than the gain you received, but realistically it probably would be written to phase out for pure optics.
I wish they'd release as much data as possible regarding the experiment so other cities and countries could have actual data to look at instead of hypotheses.
As related material that folks here might appreciate: Andrew Yang’s (founder of Venture for America) recent book “The War on Normal People: The Truth About America's Disappearing Jobs and Why Universal Basic Income Is Our Future” lays out a compelling argument for UBI, given the rise of automation and AI, as well as current economic and cultural shifts.
Yang is also running for president 2020 on a UBI platform, dubbed the freedom dividend.
He also did a Reddit AMA where he only answered the softball questions about UBI instead of how he would actually make it work. IMO, the guy is only running so he can sell more of his books.
This is first-order thinking. The problem with the poor is not that they have no money, it's that they have no ability to make money. So giving out money isn't going to fix things, you need to fix the lack of ability. In fact, giving out money is harmful, because it enslaves both the recipients and the givers. If everyone gets $100, prices will simply rise (as mentioned in other threads). But now you can't stop giving them the money, because they need it worse than before.
The people doing this justify it that they will get "valid scientific data," but they won't get any valid scientific data on how UBI performs, because they aren't doing UBI. There's a big difference between giving 100 poor people money and giving all the poor people (or even everyone) money.
A bit unrelated, but the article mentions that these ideas have been around a long time, citing Thomas More's "Utopia." However, they fail to follow up with the modern connation of the word, that utopia is unachievable. We've tried these ideas again and again, in American utopian societies of the 1800s, in communes, in Communism, and it doesn't work. Maybe it's time we stopped trying to do the same thing over and over again expecting different results the next time.
"The problem with the poor" is definitely multifaceted. You need to fix transportation, health care, availability of jobs, cost of housing, availability of essentials such as groceries/laundry, cost of utilities, availability and quality of public services such as schools and job training programs, and stem systemic incarceration of minorities, in addition to providing special services such as child care/day care, family planning, counseling, and so on.
Imagining that $10k is going to solve these things is insane. Even if you took all the money you gave to each of the people in an area and added it all up, it still couldn't even pay for a fraction of the services mentioned above.
This isn't to say UBI wouldn't be helpful. But let's face it, UBI is just some academic's moon-shot that they hope will magically improve everything, without thinking through all the complex logistical issues that require more than a bigger paycheck to solve. Sure, give people money, but don't imagine for a second that it will end poverty. It may make poverty more tolerable, possibly extending it.
I'm more concerned that the elected mayor, who has an obvious vested interest in the project being a success, wants to target "those most likely to make good decisions" - how is that universal?
The whole pretext of these plans is that there is no qualifying conditions or criteria for participation. If you only give money to a group filtered for a target outcome it's (a) just another social assistance program and (b) not an experiment
