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."
>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.
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.
"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.
> '"Means-testing"—as in welfare programs—specifically refers to payouts that have cliffs...'
means-testing doesn't imply cliffs, only checking (e.g., 'means' of otherwise survival) before providing.
progressive application is simply the continuous form of means-testing, rather than discontinuous cliffs (which are conceptually simpler, but create adverse incentives).
frankly, every fiscal program should phase in/out with income/wealth over the whole range (i.e., be universally progressive), rather than discontinously and/or regressively (e.g., payroll taxes).
in this regard, UBI simply says that instead of just being continuous, let's also make the payout function a constant.
> 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.
This is quite an uncharitable and inaccurate description of how UBI is paid for, least of all because of the implication that you'll be taxed the same amount that you'll be paid. Some folks will be paying in much more than they'll get back (i.e. rich folks), as they should be. Some (i.e. the poor) will be paying little to nothing, as they literally cannot afford to. That's the entire point.
>Although Standing says that the buzz generated by the Spanish proposal is a boon for UBI advocates, he is “disappointed” by the details. Because not everyone in Spain will receive the payment, it is arguably not truly universal. He adds that if the trial doesn’t work, people might see it as a failure of the whole UBI concept.
The opposite is also true though. A lot of "UBI" studies show positive results and are touted as proof of it's potential success. Yet they almost always only test for a short period of time with a very small group of people. So as it stands there's no reason not to discount UBI. It's not only a fringe theory discounted by the vast majority experts and academia[0], but it also never has had any supporting evidence. It's okay to discount a fringe theory especially when it's never been tried but the only way to actually try it is to fully implement it nationwide and just not care about the potential disastrous effects it could have.
[0] People love to dismiss economics as a field and disregard it's consensus, and that's their choice, but it's weird to then believe the few economists who promote UBI are right without any proof.
It is for a definition of UBI that is broader than yours (whatever that may be). Welfare is a UBI for a segment of the population. If the solutions are always the same, with a varying bar of minimum means, the people of the US have already agreed to it. What's left is to argue about degree. The emergency stimulus checks are concrete proof of that.
If one wants to get technical, there's already a pretty rich agreed upon vocabulary for cash aid, including CCT (Conditional Cash Transfer), UCT (Unconditional Cash Transfer), BI (Basic Income), UBI (Universal Basic Income).
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.
> 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.
That points at an alternative way to conceptualize a basic income: at the end of the day, it's the net transfer that matters. Ie all the money and welfare services you get from the government minus all the taxes you pay.
On average over all of society that net transfer has to be zero. (Modulo complications to do with souvereign wealth funds and government debt.)
Now, most people around the world want rich people to pay and poorer people to receive on net.
The usual way to achieve that is via means testing in both the welfare and the tax system.
Basic income can be seen as a way to simplify government bureaucracies by shifting all the means testing out of the welfare system and into the tax system.
> 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.
> It goes together with other great ideas like a minimum livable wage[0]
Isn't that redundant with UBI? If UBI is already providing a minimum standard of living, then it's mathematically impossible for any wage combined with UBI to be below that standard.
I imagine, in a country with UBI, people wouldn't talk about "minimum livable wage", but rather "minimum livable all-source income."
Also, UBI provides a minimum standard of living, but I believe the idea there is that you'd have to make several potentially-drastic changes in your life to truly be living the sort of "minimum" life that it pays for. For example, I believe that UBI isn't supposed to pay out more for people who live in areas of a country with higher costs of living; so part of "living minimally" would be moving to the lowest cost-of-living part of the country.
Remember, UBI is usually spoken of as a federal program; whereas "minimum livable wage" is usually modelled by state or even by city. So it'd make sense to talk about needing a certain level of wages, above-and-beyond your UBI, to survive in a high cost-of-living area.
(What would happen if UBI was based on regional cost-of-living? Well, for one thing, we'd see a lot of people who either don't "live where they live", but instead consistently renew their IDs within the highest cost-of-living areas; or, if the controls are tighter, we'd see people migrating to high cost-of-living areas to live out of their cars in the middle of them, to save up the most money.)
> (What would happen if UBI was based on regional cost-of-living? Well, for one thing, we'd see a lot of people who either don't "live where they live", but instead consistently renew their IDs within the highest cost-of-living areas; or, if the controls are tighter, we'd see people migrating to high cost-of-living areas to live out of their cars in the middle of them, to save up the most money.)
IMO those would be exploited infrequently enough that it would be worth it to base it on regional cost-of-living and tighten the controls until exploitation falls below an acceptable level.
The real exploitation wouldn't come from individuals, but rather real-estate developers, who would see an opportunity to build communities with absurdly-high costs of living (due to e.g. being built in the middle of nowhere with everything needing to be imported, like Dubai), where the government would basically pay people to live there, by increasing their UBI commensurate to the increased costs of being there vs. somewhere else. Unlike now, there'd be no disincentive to moving somewhere "more expensive" — you'd be given exactly as much money as you need to balance those expenses!
You'd also get the same sort of wealth-transfer effect that you get when people move from poor countries to rich countries to gain access to rich clients who pay more for the same service; or, for that matter, when people move from the rest of the US to SV (but with the government, in this case, taking the place of FAANG.) Namely, that most of the goods that people want aren't inelastic-demand goods priced in "percentage of income relative to the norm for this market" terms; but rather are priced in absolute, static dollars.
This means that in a low cost-of-living area, saving 10% of your UBI could buy you crappy clothes and a crappy car. While, in a high cost-of-living area, saving 10% of your UBI could buy you nice clothes and a nice car, and maybe a boat and a new phone every year, too. Who, then, wouldn't want to live in a high cost-of-living area? You don't have to do any more work, or have any more skills; you just have to choose to live in a "basic" big-city apartment instead of a "basic" small-town detached house.
Which, of course, means that everybody would move to these places, and their housing markets would halt and catch fire from the overburden of all these people trying to cram into them. It'd change an equilibrium of regional housing prices into a rich-get-richer one-directional reaction. And probably cause hyperinflation besides, as the government would have to print money to pay everyone's rent, as the rents in high-cost-of-living cities would rise exponentially as infinite demand meets finite capacity.
My understanding of basic income is a bit different. The average American adult needs to make 1500/month to meet the basic requirements of life. This is equivalent to paying off a mortgage over the term of your life of about $500,000, or student loans to the tune of $250,000. (I used an annuity calculator for these figures https://www.bankrate.com/calculators/investing/annuity-calcu...).
Basic income can be distilled to notion that, if student loans are bad for humanity, then it is reasonable to suggest that this intrinsic debt might also be bad.
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.
> 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.
Keeping a hulking bureaucracy around as a jobs program is the last thing we need. So far, whenever a disruptive technology or policy change has happened people have found other work to do. Let's not worry about the oncologist jobs as we search for the cure for cancer.
People can get different jobs; its not a blanket "they're all on welfare". That's the issue: what will people do when they don't starve if they don't work? Historically, they get better jobs. Because they have the leisure to do so, and partly because employers must pay well to get anyone.
I don't think we have enough data to say anything. For example, it might as well be that housing prices decrease, because people can now choose where they live independently from having a job. Cities might become much less attractive.
Furthermore, a lot of that overhead are people like social workers and so forth. Even if one accepts the principle of reducing means testing and so forth, is it really the proposal that everyone gets sent a check once a month along with a note that basically says "You'll get another one next month. Until then you're on your own. Enjoy."
> 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.
Framed another way, we've freed up more people for more beneficial jobs. If those don't exist (and broad classes of jobs are eliminated all the time with practitioners finding alternative employment, so I'm skeptical they wouldn't) then your argument boils down to the ideal form of welfare for those people being make-work exactly matching their current situation. That may be the case, but it doesn't seem blindingly obviously true for any reason I can see.
> If everyone gets it, do prices just rise to meet that reality and soak up the "free" money.
Maybe, but you'd probably expect the opposite effect in most markets (and indeed, for similar policies like a higher minimum wage we typically observe small increases or small decreases in prices as a result). As a low-order approximation, the demand curve would have a (nonuniform) rightward shift where for any given item/price an equal or greater quantity are demanded because people are better able to afford things. Assuming a monotonically decreasing supply curve, that would move the equilibrium to more things being sold at a lower price.
That of course fails if any of the assumptions are violated (and ignores any other effects like increased taxation) -- e.g. at any price building new housing in the Bay is capped for all intents and purposes, so ignoring any other effects one might expect housing prices to continue to increase here. Housing in most places would probably eventually have a small dip/slowdown in price though, and commodities almost certainly would.
> We'll need regulations (and people to enforce them) to make sure housing prices stay reasonable for lower income people.
Arguably yes (though price fixing might not be the best solution to that problem), but that seems independent of the UBI question.
> but we should be helping more people and the well off can afford to pay 1% more of their largess to do so.
We should help more people, but I think it's more expensive than you're imagining. The top 1% of families make $400B (give or take $100B). 1% of that is an extra $500 per family below the poverty line, or $50 per bottom-99% family. It's not nothing, but $300/yr barely covers a single person's worth of beans and rice if they have the means to find a cheap bulk source, if power/water/time for cooking are free, if they're on the smaller side and not doing strenuous labor, and if they eat no vegetables or anything to offset that nutrient deficiency.
>If we are the rich west, why can't we just take care of everyone?
What does it mean to "take care of everyone"? That their "basic needs" are met? What do you define as basic needs? I will assume that this will include at least food, housing, and clothing. Is it acceptable to provide everyone with rice? Potatoes? Do we have to provide them meat? Is it acceptable to offer them housing somewhere in the country or does it have to be near where they currently are? If the latter then how do you determine who gets displaced further away?
Now the answer is likely going to be "we give them money, so they can decide". The problem with this answer is that life doesn't cost the same everywhere in the US. $1,000 a month is enough to live on in some areas, whereas others $1,000 will barely get you a living space and nothing else. Obviously you can't give people in more expensive areas more money, because then everyone would want to be in the expensive areas.
So, how much should we give people?
When answering that question keep in mind that there are 330 million people living in the US. If you give everyone $1,000 a month it will cost you $4 trillion. US tax revenues in 2019 amounted to $3.5 trillion.[0]
To put this into perspective: US mandatory spending in 2019 was $2.7 trillion.[1] This is stuff like Social Security, Medicare, Medicaid, veterans programs etc. You can't just renege on all of these obligations, because the government gave people guarantees on them - that's what they paid taxes for. It's unlikely people would accept less money than what they were promised. Not to mention that you probably couldn't cut Medicare and Medicaid anyway. That's already a trillion gone from the budget.
You probably also can't cut much from discretionary spending. You'd be cutting the military and basically every other non-social service the government does. Stuff like NASA and environmental research etc.
Ultimately, just $1,000 a month per person would require an enormous budget increase to the tune of >$2 trillion a year. Keep in mind that the US budget deficit is already at $1 trillion a year. You'd have a deficit of $3 trillion or require an enormous tax increase (almost doubling tax revenue). And it still hinges on there being no reduction in productivity.
If you then want public healthcare too, then it gets even more expensive. Medicaid covers 64.1 million people[2] at the cost of $409 billion.[1] Getting rid of Medicare and Medicaid and replacing it with healthcare for everyone would add up to an extra cost of ~$1.3 trillion, assuming that the healthcare costs for everyone else is about the same per person as it is for people on Medicaid.
"A trillion here, a trillion there, pretty soon you're talking real money."
The goal is to ensure people have a minimum. Taxing money back is perfectly fine if you need to. People can move to less expensive areas which the UBI facilitates. This makes expensive areas less expensive as well.
In terms of how much to give, the idea is to eliminate poverty. Children should not grow up hungry and fearful nor in shame of their parents. That is the fundamental goal. Our current welfare programs do not address this (see Tyranny of Kindness from 1993 for an in-depth personal account of the system then -- it has not improved though it has changed).
So go with the poverty threshhold numbers and see how it goes. I think $1000 a month sounds perfectly reasonable.
Also, various programs are income related and so without changing them at all, they can become less needed.
As for healthcare, while I am dubious about government run healthcare, from what I've read, the government pays for over half of the healthcare costs in this country already. The US also spends twice as much in terms of GDP on healthcare as most other countries. So if we were to reduce the healthcare costs to the level of other countries, then our government could cover universal healthcare without paying more for that. And since premiums would disappear, it could even tax a lot more without changing the ultimate take home pay after taxes + premiums.
In theory, that is how it could go. I don't believe it would turn out well, but that's because I don't believe the government would handle healthcare well. It is not because of the cost of it. And given our current system, I could probably be persuaded to try it.
Coronavirus should be a real wake up call to many of the economic left. A few months of furlough schemes by the government and countries have taken a huge hit to their economies. I have no idea what percentage of people got furloughed, but its clear to see not everyone got furloughed, it was for a few months at most and its going to cost a hell of a lot.
The obvious justification is that increased government spending is balanced by increased tax revenues, which hasn’t happened in this situation because no one is able to work or spend.
I don’t see how the cost of furlough is an argument against higher spending. No one thought it would be anything other than mad spending with little immediate gratification. The payoff comes from, well, not plunging masses into poverty for not foreseeing the greatest economic disruption since 1939.
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.
Unless we decide to print money, not everybody will end up with an extra $1000 / month. The money that would be paid out in UBI will either come from taxes or from efficiencies gained by dropping the patchwork of benefits programs.
My expectation is that if I receive $12k / year in UBI, my tax burden will likely also increase by about $12k / year - maybe less, probably more. I don't think UBI would have any significant effect on me unless I lose by job (or decide to quit, which is an advantage of UBI).
I think the scenario you describe might affect poorer people, though. It really depends on how much the other social programs are walked back under UBI. If a poor family gains $1k in UBI but also loses $1k in other welfare programs, then landlords will likely not be able to raise rent without also losing tenants.
> 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?
Collectively? Anti-trust law. Individually? Competition among landlords. Also, for some tenants in many places, rent control.
> If everyone suddenly has an extra $1000/month,
Everyone doesn’t, unless the government is just printing money for UBI and also not replacing other programs. If it's borrowing, that money came form somewhere. If it's taxing, it came from somewhere, too. And UBI proposals tend to involve replacing, either in part (for some transitional models) or entirely means-tested welfare, which also means a bunch of money came from somewhere (from recipients and, and this is a major motivation for UBI, from the administrative infrastructure that means-tested programs have.) Compared to before the policy, the result is nothing like “everyone has +$UBI/month”.
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.
There are plenty of cities with plenty of housing going vacant. In Baltimore, for example, it is a city designed for a million people with about 600k in residence. Houses go vacant, neighborhoods loose value, and the city dies. Why?
A large part of it is the lack of financial resources that the residents have. The lack of financial resources is directly related to redlining and the fact that Baltimore is a majority black city. But whatever the reason, money is what is required.
At $1000 a month, someone could take that UBI and spend half of it on a loan of $100k (30 years). That's a lot of capital and it could provide an individual with a home in Baltimore. A family would have even more capital to work with. This gives a great deal of flexibility and a lot of resources in neighborhoods without any. Further development would take place, giving these neighborhoods the kinds of businesses that wealthy white neighborhoods take for granted (such as grocery stores and banks).
What the UBI does is not just provide some financial amount right now, but a guarantee of future payments regardless. The risk of default would be far, far less and the promise of sustained financial reward for investment in these areas, without booting out the current residents, would be far greater.
If one also couples the UBI payments with a more aggressive tax on the wealthy, particularly on the ownership of multiple residential properties, then one could really damp down prices. From what I have read, several cities with massive housing price increases such as Vancouver and NYC have vast amounts of essentially vacant places because wealth has flowed into these places as wealth investment instead of living investment. But that policy is a separate one to consider, to be sure.
This country has plenty of resources. If we give people a minimum amount of money, those resources can start to be divided up much more equitably (peacefully, profitably) without the overt (and corrupting) hand of government deciding who gets exactly what.
Supply and demand. Prices would likely go up, and you're right to point out that a chunk of it would go to landlords - but unless there is collusion, these landlords are competing with each other to find the fair price in the market.
UBI is generally trickle-up economics, and I think that's a good thing. That extra money is most important to the least wealthy people, and they will naturally spend it in their communities.
It encourages people to get out of the damn cities!
There's a reason why it costs a king's ransom to rent a hovel in a city: finite space. Nothing you do -- not density, not UBI, not anything -- can create unlimited space out of thin air. Fortunately, we've got plenty of space, just not in urban centers.
We need to learn how to use space rather than let it use us.
That's technically true, but horizontal space can be parceled out somewhat independently, vertical space can't, and that's a big deal. You're right that it's a political stumbling block rather than a physical stumbling block, but city housing is expensive everywhere, so it seems appropriate to treat it as an empirical law rather than something that can just be hand-waived away.
I'd support efforts to build vertically in a heartbeat, I just don't have high hopes for them.
Cities are economically efficient. If your praise for UBI is that it reduces economic efficiency (reducing your ability to pay for UBI) then I think you're going off course.
No, paying poor people to compete with each other for city space is not efficient. In terms of efficiency, it's about on par with stacking cash in a pile and burning it.
City space is finite. We ration it for a reason. We could ration it differently, but we'd still have to ration it. Increasing density doesn't make it affordable to pack everyone in a single place (see: NY). Pretending the problem doesn't exist and throwing money at housing projects doesn't make it affordable to pack everyone in a single place (see: SF). The only way to make progress on the actual problem is to figure out how to deal better with being spread out.
Increasing density helps a lot. The US mostly has lost the skills and will to do density. New York mostly stopped building enough to keep up with demand.
Look at Asia to see how to tackle these problems better. Eg Singapore.
Yes, it's not completely clear whether they'll have the political stomach to actually go through with letting the leases lapse at the end of their life.
It would probably have been better to use Land Value Taxes instead of relying on limited leases.
Great question. This is THE show stopper for UBI as presented by any proponent today.
The only way to implement it is by stopping the runaway rent inflation by implementing a counter-force to rent price increases. One such technique is battle tested Land Value Tax which was responsible for massive successes of Asian Tiger economies such as Singapore.
This problem has been understood more than 100 years ago by then popular economics movement following economist Henry George who almost made it to mayor of New York and whose book (Progress and Poverty) coined the term Progressives (in the original anti-trust meaning).
They realized that after you curb the ever inflating rent prices, people can finally be freed up of all excess income being eaten away by land monopoly (city landlords) and other monopoly businesses of that era.
Once you have the money necessary to fund UBI through Land Value Tax for example (which is able to raise more than current tax system with ZERO negative impact to the economy), you then realize that the main problem you were designing UBI for (massive rents eating away your paycheck) went away. So as a government you then reinvest the so to be UBI money into eg. infrastructure, such as city development, roads and networks so that private business can thrive on top of that. Congrats you've now become the economy #1 in the world (this is how asian tigers got so successful).
The only country successfully implementing this at scale today seems to be China, although more so for their expansion in Africa than domestically
(eg. acquiring prime city land by helping constructing subway systems in key metro areas).
An optimist would predict that some people will spend the extra $$$ on a car and a move to the suburbs; others will choose not to work at all, moving to cheap areas to live frugally; and others will find house building much more profitable as rents rise, motivating them to build more.
A pragmatist would say you're completely right, based on my country's many failed attempts to lower house prices by handing out money to house buyers.
Not just rent either. Prices will rise across the board. The thing no one ever seems to mention when talking about wealth redistribution in purely financial terms is that there isn’t some untapped reserve of housing, groceries, transportation, or any other good that’s just waiting for more money to buy it. If we give people more money to buy these things, it might spur more production for some things that have an elastic supply, but it’s more likely to inflate prices. Billionaires don’t use their wealth (generally) to consume millions of times more bread than the average low-income person.
If you give more people money to buy things, it’s more likely to spur production than raise prices in most cases. If there’s more demand for groceries, it will probably be met with more supply rather than higher prices.
That assumes no supply-side restrictions. With housing in big cities it's often supply-side restrictions that cause the rise, like zoning.
For instance: affordable housing. If there were fewer zoning restrictions on micro-studios, housing developers might be able to pack more units in to get the same amount of profit per sq-ft. Instead zoning means that you get the most $ per sq-ft building luxury apartments.
One thing UBI has over housing vouchers is if it's not tied to location people can live where it's cheaper.
What currently stops landlords from raising rents such that no renter has any disposable income? Surely my landlord isn’t simply convinced that I am paying them every cent that I could possibly afford to pay them.
As much as it has been tortured and mutated there are still market forces driving things. Supply of housing stock, supply of renters, their ability to pay at all levels of the economy from jumbo mortgages down to section 8 housing are all factors driving the marketplace.
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.
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.
MMT measures inflation by standard inflation measures such as consumer price index. Real Estate and land prices are not included. Look this way if you want to see where the newly printed money end up.
Btw inflation is intentionally underreported because the only way to repay government debts (under democracy) is by debasing currency and thus value od debts through inflation. It's just a hidden tax.
Your core assumption is that flooding the system with money will cause inflation. However, in many modern cases we do not see that occurring in the traditional sense. Recently CPI-based inflation is non existent in the large economies of the world, but asset inflation is, which exacerbates wealth/income inequality and leaves the potential for a Japanese-style "Lost Decade" (which has been going on for much longer than 10 years at this point).
Asset bubbles, misallocation of capital, and mortgaging the future to support the present are the pressing concerns with easy money that should be addressed.
Perhaps if things get way out of control, but even then not entirely. People need money to pay taxes. Individuals wishing to avoid jail is a great way to ensure a large majority of the population uses your currency.
Austrian economists barely discuss hyperinflation. They instead endlessly talk about the distortive effects of inflation on the economy as a whole, such as decimating savings, and that the idea that a good economy is based on consumer spending is political gobbledygook believed by politicians who only listen to bad economists that tell them what they want to hear.
It would be interesting to have a discussion about some of the Austrian critiques of MMT or UBI on this site. I often see mischaracterizations and generalizations of those views here.
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.
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.
Some of the write-in comments were interesting such as "there are some limits such as financing the entire world's output" and "this will make it impossible to sell more bonds". I would be interested to see a debate between a mainstream and MMT economist, to hear how a MMT supporter would address these critiques.
Forget about actually cutting taxes directly, 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.
In this implementation, the bonds are still being paid back via taxes, but those taxes are coming from the Fed's printing of money.
Policymaking is hard, it's never quite fair, but those seem like awfully addressable problems to me. I mean, you don't "have" to cut disability entitlements if that's not politically feasible. Cut what you can, and adjust as needed. It's not a reason to Refuse To Get Started On The Problem, which is what nitpicky criticism like this gets used for in practice.
I mean, the core idea of the article is that direct cash benefits reduces poverty directly, in a quantifiable way (there are some numbers already!). That takes a sword directly to the Gordian knot of the policymaking kerfufflery, and that evidence and its attendent simplicity is far more (FAR more) important to achieving a solution than "getting the right solution".
> Cut what you can, and adjust as needed. It's not a reason to Refuse To Get Started On The Problem, which is what nitpicky criticism like this gets used for in practice.
Fair, but UBI advocates very often do things like bundle up all existing social payments, divide the total dollar value by the population size, and say "look how efficient it would be if we just gave this money away rather than having a complicated set of bureaucracies charged with disbursing it fairly!"
If the argument for how affordable UBI is hangs on this kind of logic, then yeah, it is pretty relevant to take an upfront look at what proportion of existing program funding (and associated bureaucracy) are actually candidates for being replaced like this. Some are obvious exclusions, like anything to do with mental or physical disabilities, and some are fairly clearly covered under UBI, like unemployment insurance. But a huge pool of them are pretty murky— think especially of things like child/family benefits, or anything to do with education or job retraining.
> UBI advocates very often do things like [play games with numbers to make a point]
Which is EXACTLY why the kind of data we're deriving now, based on real world policymaking, and as described in the linked article, is so important. It's impossible to refute with more funny numbers.
> If the argument for how affordable UBI is hangs on this kind of logic
It doesn't! That's the amazing thing. You guys need an entirely new kind of spin, now.
Not sure what you're accusing me of spinning here. I want UBI to work, and I want it to be affordable. But more than that, I want the underlying problem solved, which is income and wealth inequality.
What I don't want, is to see a bunch of half-baked policies rushed out the door, only to be shuttered a few years later and tossed onto the pile of "lol communism always fails" just-so stories, with the door to change closed for another generation.
Going into these kinds of major efforts with a "better vs perfect" attitude has a high risk of alienating those for whom it may well not be "better", especially if they are members of a vulnerable group that has a high reliance on the present system.
1)stock market back to precovid levels... even though job and economic losses are widespread. That is not normal, but it is logical given the cash flooding all assets now.
2) sticky unemployment largely affecting minorities and the youngest.
3) the conversation has shifted from... where can we reduce the govt footprint?. To, should this new thing be done?
In effect - Leaders today are leaving a legacy of destruction and misery that will be reaped by our grandchildren.
Our leaders are perpetrating the largest ever robbery of future generations.
Its inmoral and it is not "better"
I agree. I am big supporter of some form of UBI but there needs to be some thinking along the lines of what services can or should be privatized. For example, I think housing is one that should be. I would prefer to give people rent checks than to provide public housing in food-desserts and bad school districts. But on the other side, are we going to reallocate budgets from the fire departments and let people subscribe to their own fire fighters? I don't think so.
Would be interested to hear if anyone has a ideas or a framework to think about this.
None should be? We've experimented with privatization in the UK. No field has been a success, every one has been a failure afaik.
Trains - Worse, terrible in fact
Housing - Went from 300k houses p/y being built by councils, to 30k by their privatized replacement. Now severe housing shortage 30 years later
Medicine - Terrible, caused deaths in covid crisis, privately managed PPE stocks were a disaster
Water - Terrible, all profits have been used to pay shareholders, taken on huge debt. little investment in infrastructure, ticking time bomb before bailout needed
Energy - Crazy price increases
Prices go up, services worsen, and debts pile up. Tell me again why you think they should be privatized?
All that happens is a bunch of privileged shareholders get to mooch off the public purse.
I certainly agree that a lot of privatisations were messed up, but but in the late 1970s the UK's nationalised industry literally only managed to produce enough electricity to keep the lights on three days a week.
It was pretty easy for Thatcher and Blair to sell the concept of privatisation when that was in widespread living memory.
Given that the miners who were on strike all worked for the National Coal Board, and that coal was converted into electricity by the Central Electricity Generating Board, it seems like a pretty major failing of nationalised industry to me, yes.
I think the jury's still out on if privatization is the primary factor for success or failure or if other complex factors determine the success/failure of these programs (I would guess the later).
Basically you can divide the economy amd businesses into
1. infrastructure and platforms (justice, roads, utilites, networks) - where privatisation results in disaster 99% of times
2. "typical businesses" - privatisation generally good idea
3. things inbetween (schools, healthcare) - neither fully privatized or centralized system works well. Usually a combination of both performs much better.
Eg. hybrid healthcare system deals with runaway costs by having a baseline health service provided by government and prevents soviet-style wasting, theft of material by employees, black markets and long lines forming by having a parallel market health system alongside.
Both can keep each other in check. One has to wonder why countries always deploy it in one of the pure forms.
In those examples, would you say they're all examples of privatization without competition, where the incumbent effectively owned the existing infrastructure and the barriers to entry for newcomers were high?
> I would prefer to give people rent checks than to provide public housing in food-desserts and bad school districts.
It maybe doesn't always work out great in practice, but at least in theory, municipal governments do have tools for addressing these problems in a deeper, longer-view way than the market and private developers can. Left to its own devices, "the market" will just abandon those food desserts and bad school districts and you end up with the same hollowed-out inner city that was such an issue in the late 20th century.
Anyway, whether you bring poor people to a rich neighbourhood (with subsidies, density bonusing), or you bring rich people to a poor neighbourhood (revitalization, gentrification), there are going to be issues, but housing policy is something that requires long term, active stewardship, I think.
And then rents will augment by that exact amount, screwing up those who don’t get the check and nullifying its benefit for those who do. I know from experience as this is implemented in France (it’s called the APL). Lot of rents are higher than they should for students under the pretext this social aid exists.
A similar relationship exists in the US between ease of getting loans for college and houses and the price of colleges and houses. I don't know if causation is fully established but they do tend to go up together.
Okay, the government could say if landlords increase their rent, then we'll increase their property tax by 5-10x the amount. If they want to play that game, we'll do the same, but much worse. Let's see what they do then.
Governments already do basic income, it just isn't universally distributed. Instead every little bit of new money supply is instead given to banks with corporate charters. This is done by allowing banks to create money out of thin air, money they don't have, as debt on their balance sheets whenever they "give" out a loan.
Then the people receieving this loan have to pay back this new money. In this way governments do basic income for all 5k corporate banks in the USA and it's likely very similar in other nations with fractional reserve banking.
It would not be very hard at all to simply remove this functionality from banks and evenly distribute the creation of new money supply.
3) they forget to curb the asset price inflation in real estate and land values. The basic fact that UBI proponents have been warning about.
Real estate is just a hidden land value price. Look at Japan where the price od buildings are close to zero or even below zero (cost od destruction for new project) after about 30 years even when the total price (building+land) is astronomical.
The way to curb it is through Land Value Covenants or Land Value Tax or Hong-Kong style 99year leases or something to that effect.
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?
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.
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.
The big factor with covid is, people know it's temporary and still need to keep their careers going. Behaviour would probably be very different for a permanent scheme.
> The big factor with covid is, people know it's temporary
Do we? Some people might believe it but there doesn't seem to a lot of evidence for it yet. If anything it seems that it might behave like other seasonal viruses such as the flu and especially like other coronaviruses such as the common cold. That is it might mutate so rapidly that immunity will not last.
So we might have to live with it or something like it for ever.
Even the most die-hard UBI critic would concede that UBI would "work" over a short period of time - hell, I'd suspect it could be made sustainable for a couple of decades. The point is that eventually the whole thing will come crashing down and people will start starving to death after the last of the golden goose's eggs are gone. That's not going to happen this summer.
If you just took all the existing taxes and welfare programmes, carefully noted what net payment people are getting at various income levels, and then replaced it with a simpler system of a fixed UBI payment and a tax system to roughly replicated the same net payments; I don't see how that would be any less sustainable than what we currently have?
And current systems have been muddling through in most countries for quite a while so far.
However, if by UBI you mean that everyone is supposed to get some extra magic money out of nowhere, yes, that wouldn't really work.
Every system I have ever heard of has the "system will crash in the future" fear. Capitalism will eat up all the resources and pollute us to death. Democracy will lead to mob rule. Philosopher kings get replaced with crappy kings. Social security was supposed to have gone bankrupt several times by now.
The thing about UBI is that it in no way, shape or form, prevents people from doing whatever is needed or profitable.
There are a number of people which have sufficient funds to live off $1000 a month and they continue to work. Heck, even the bloggers who talk up such schemes are still producing something of value to the society.
Humans like to work, just not necessarily for a boss. A UBI removes any disincentive from working and allows you to keep what you make except for the tax rate unlike welfare which taxes income at 100% . It allows you to be creative. Right now, we are ignoring the contributions of millions, if not billions of people because they are kept at the edge of survival. Imagine if we created a world that allowed all the billions of the world to contribute imaginatively, cooperatively, and productively. That is what UBI promises, but it does require faith and trust in humanity (read Rutger Bregman's Humankind book for a primer as to how to shed the lies we've been told about human nature).
As for hard maintenance of systems, that will probably cost more to pay people to do it, but it seems very reasonable to reward essential hard work more than we do now.
One final thought. What do you expect you or others you know would do if you had $1000 a month per person in your family given? Maybe some would want to sit around for decades doing nothing, but that personally sounds like an awful life to me and I suspect most would agree.
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.
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.
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.
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.
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).
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.
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.
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) 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.
"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.
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.
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.
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.
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.
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.
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).
I thought about that case, too, but left it out to keep things simpler.
In general, I assume that governments in control of their money supply will already have policies to max-out seigniorage gains. Eg the Fed and ECB regularly wire profits to their governments.
There's a limit to how much extra wealth you can extract from the economy for the government via printing more money. Despite MMT inspired claims to the contrary.
I think from a government fiscal perspective it's the same, but it's probably not from the viewpoint of the individual participants.
i.e. I have a well-paid job but stop working halfway through the year. On a full-year tax basis, I'm not in the bottom X% of tax payers based on my earnings to date.
Do I get a UBI check or not for the rest of the year?
Since virtually all tax matters are based on averaging income over some long time period (usually a year), it's not a good mechanism to deal with changes in income, and those changes in income (planned or not) are precisely the things which UBI is supposed to help with.
To make this more clear, the negative repercussions of UBI really center on the 'U' a lot of the time. What happens when everyone has more money for essentials?
> What happens when everyone has more money for essentials?
Everyone doesn't have more money with UBI unless it is funded by printing money. If it's funded by taxes, or borrowing, or a combination, there is equal money being extracted as being injected.
The proponents still fear inflation. And some goods may become inflated if everyone starts consistently receiving UBI payments. I'd see media increasing in price since those that are currently buying it are not necessarily destitute for food. There'd be plenty of payments towards debt... which I'm not an economist so I can't say what exactly that liquidity in the credit markets would do. You'd see an uptick in food purchases as EBT, food pantries, etc. decrease in capacity and food is purchased directly from stores without limitation on purchased items.
Plenty of consumer crap would be consumed too. Magic cards, Funko Pop figurines, Alco-pops and Big Macs.
What I don't see happening is the cost of housing skyrocketing. That assumes we have a limited supply, we do not we have a excess. We could house every person in the US today... well tomorrow with realistic travel times.
> And some goods may become inflated if everyone starts consistently receiving UBI payment
Sure, any redistribution of income increases prices of things demanded more by the recipients than the sources of the redistribution. This doesn't, ever, fully offset the effects of redistribution, it just means the effects of any redistribution will be somewhat smaller (both on the recipients and the sources) than they would be expected to be based on a naive projection from pre-redistribution prices.
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.
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.
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.
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.
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.
Why do you think the snowball method is irrational? Like any method it has its flaws, but studies from Northwestern and Harvard indicate positive results [1] which moves the argument closer to evidence than pure assertion.
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.
"...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.
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.
> The people that need it the most cannot make rational decisions.
I think it's pretty hard to argue against cash... if anything you do have to be a bit more economically knowledgable to disagree with the idea. But then at the extreme end you have economists at the top of their fields in favor with the approach.
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!"
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?
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.
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.
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...
Beyond that this is unprecedented times/circumstances so it's really difficult to make general conclusions about this "experiment."