I worry about three things with UBI though and they're more social than economic.
1. Power Divide - society will be easily divided into two groups: those who depend on the UBI to live and those who don't. The former will be absolutely at the mercy of the latter. We can see this a little bit with the coronavirus relief packages.
2. Predators - individuals and companies will find a way to take your UBI check from you as fast as possible. We can see this in housing where some governments give poor people vouchers for rent. Those vouchers are targeted by slumlords who find a way to give you as little as possible for them. There will be rampant scams and bad behavior in areas where the UBI makes up a larger portion of total income.
3. Charity - let's say we actually give every person enough money for food, housing, and utilities. Some people will mess up. They could spend it all on an addiction or just make a bad investment. Even with UBI they could still end up hungry or homeless. Will we help them? Or will we say "you had your UBI, the rest is on you". This changes the morals of how we treat people in the worst times.
I wish all of the above wasn't true. But I just don't think America can handle UBI and I'm not sure how that's going to change.
One aspect of UBI is that poor people would be less at the mercy of the rich. If you're a poor person now you absolutely have to try to keep your horrible job else you'll lost the ability to pay rent and buy food. You have to take all the crap your employer gives you. With UBI, assuming it's enough to live on, you could walk away from that job and still survive. That shifts a lot of power from employers to employees. It's one of the most appealing aspects.
That is a very strong statement that I don't think can be claimed at this point.
In my opinion, I feel things will simply shift under UBI. People will receive UBI, but then other things, like rent, food, etc. will all just magically get more expensive.
I cannot see any implementation of UBI working any better than things now unless the predatory nature of those in power is put in check.
Consider a very smart and very poor person. You walk up to him and say "Hey, want 1200 dollars?" Do you think he'll say "No, that would increase my dependence on the rich." I don't.
I just can't conceive of the mechanism. Slum lords try to separate the poor from their money now. Pretty much everyone does. The only difference is, the poor would have more money.
There's probably going to be predation on the mentally ill or incompetent. That could be solved by helping those people, limiting what they can buy, or harshly punishing the exploiters - some combination. But even if they were cheated out of their UBI I don't see how they'd be worse off (without assuming people wouldn't help the mentally incompetent if they had UBI which seems dubious to me).
Maybe UBI would come with some sort of rent or price controls. Or maybe the fear of massive inflation would temper the greed of the rent-seekers. I don't know how it would play out. And I have to say I'm generally in favor of UBI. Just thinking out loud about how it might not be as helpful as it could be.
Renters almost by definition aren’t capable of amassing enough capital to build new housing, so are at the mercy of the existing supply. If it is guaranteed that everyone has a capital-amassing stream of income available to them, they gain an ability to turn that stream into something longer term. Sure, this still may not be possible in areas with strict housing regulations, but a guaranteed, portable stream of income also provides people the means to move.
And why would they sell you land for less if they know you have $40k more of income? Everyone can pay that extra money, if I am a seller I am raising my prices accordingly.
Some people on UBI would happily trade worse living conditions for more spending cash. But that freedom of choice is what enables efficient resource allocation.
The article talks about an overabundance of CONSUMER GOODS, but no amount of deflating TV prices can make up for the fact that Rent, Healthcare, and College is what's putting pressure on the lower and middle class right now. UBI will inflate rent the same way cheap student loans inflate tuition.
Because it's not about mere money, but about power. Getting double the money you get now doesn't make you more powerful than e.g. Jeff Bezos. In some instances it might make you less (e.g. if the cost of living increases because of the extra money circulating, if you start depending on the extra money, etc.)
It sounds like you're saying most people wouldn't quit, which doesn't conflict with my statement, which is that "some people" would quit.
If you want to try to dispute that, you'll have a tough time with me, since I personally already have quit, even without the UBI, and from much more than $100k.
What do you think every landlord will do next year?
is priced in a similar way.
>I think rent in high-COL cities is more determined by high demand there than landlords' personal assessment of the residents' average incomes.
A landlord doesn't have to personally assess the average income of the residents. The high demand will roughly do the assessment for them.
>With UBI, people would be more free to move away from areas with high rent.
This is something UBI allows, but I'm skeptical whether people will actually do that. Remote work also allows people to do that, but until the virus it hadn't really been considered as a serious option in the vast majority of workplaces.
Yes but the cruical difference is that now, if I ask for remote work to move and the company says no I have to choose between having and income and moving. With UBI they say "no" I say "ok" and have income to fall back on.
The key thing UBI enables is the ability to meaningfully make a choice to leave your current job if you want to without destroying your ability to keep yourself alive.
Also, where would people move to? Many destinations are developing countries and thus the cost of living there will rise in the long term. Also, these expats would be heavily affected by foreign exchange rates.
People might indeed cluster up in certain places, buy property there and live a leisurely livestyle. These factors would make prices rise and in the long term it would become less attractive to move there. This happened in Spain where property prices in premium locations have skyrocketed because of well-off people from other EU countries buying homes there. Depending on how much the goverments of the target countries care about this, they might think about countermeasures, such as restricting property acquisition to locals.
If the outflux of money becomes significant, it will affect relations with the target country as the origin country will seek to reverse the flow. Trade deals will be affected, and developmental aids, if there are any, might be reduced. If it works, the target country might make it more difficult for expats to stay long-term. But the most straightforward approach might be to limit the UBI based on residency, or make the expat lose perks such as voting rights.
I am a supporter of the UBI theory but I have to say I am skeptical of the implementation. People are usually incentivized to move towards the places that provide opportunity - jobs, education, etc. UBI might dampen that incentive.
Given that most leadership systems are strongly influenced by the rich I have to wonder whether a system like UBI will be implemented in such a way that people are less dependent on the rich rather than actually becoming even more dependent.
Everyone needs to live somewhere. Landlords only profit if their properties are occupied, but they can simply decide to all increase their rent by $1000 a month, knowing that eventually, the only choice for some people will be to pay it or be homeless.
I have no idea if it would actually work this way in practice.
As someone who repairs and resells $200-$2k cars I assure you it very much does.
The price floor for a running, driving vehicle pretty much never goes below 2wk of pay at whatever the local minimum wage is.
(This does, indeed, fall under "some form of socialism" that the author deems magically "unworkable." Simply a tax code of affordable taxes for personal property - i.e. a home you own and live in - and high taxes for private rental property used to make a profit, with the intent that it should make financial sense to sell to an owner who will live in it.)
Do you have any evidence to support this type of absolute claim? People have been screaming about inflation since the Fed massively expanded their balance sheet in 2007. The only things we’ve really seen inflate are assets (buying housing, stocks, etc.) we haven’t seen much inflation in non-assets (renting, commodities, consumer staples).
Edit to add some specificity, although it's not "rent". Here  is a 3 bed/2 bath house in a very safe Chicago neighborhood for $325k. The local public elementary school is an 8/10 and the high school a 7/10.
If a significant number of readers here on HN click that link, driving traffic to that specific listing, I wonder if it would cause the agent to think there's more interest in the home than there really is, giving them the suggestion that they should increase the price.
It does have a "HOT HOME" banner on the first picture. Could that be from HN readers?
Only difference is that the guy who earns $2500 right now might be able to get a better job because he can quit without immediately losing his apartment.
As for dependency, the money won't magically spawn on the table, they will be earned by state on taxes and then paid to citizens/residents. So you depend on who is in power anyway since there will be many rules, exceptions etc. It brings another new universe for corruption, leftist politicians to promise (and deliver) higher payments that next generations will have to pay back and so on...
All these mental games, me, you, everybody... we can't get the full picture of everything mixing up with everything else - economy, mentality of individual and groups, greediness, black swan events, selfishness etc. and come up with a nice simulation how it will end up all joined together. That's just wishful thinking and people pick up side which they prefer, nothing more.
Which is not the case. Hence, rent will obviously not change, as will prices of products and services.
> the money won't magically spawn on the table
LOL, yes it will.
The first world country I'm from has, effectively, nation-wide rent control (varies by region) and rent increases are limited to something around 1%, set each year (tracking inflation somewhat).
In the US, this will work very poorly: a landlord can just bump your rent by exactly the UBI amount and get away with it. Otherwise, they would have to wait for a vacancy to set the rent. But eventually, I agree that the rent would just absorb the UBI in many cases.
What is the incentive for the owners of small apartment complexes? It seems clear. They need to renovate their apartments so that they can capture the new up-market demand. Successful, mid-tier apartments could buy up cheaper complexes to renovate them and charge higher prices (this happens even now).
The low-demand, low-price alternatives will fade away, because the land owners can make more money with slightly nicer, more expensive units.
They'll move to better neighborhoods? What's going to happen to the people living in those neighborhoods? It's not like there are houses sitting vacant...
A typical mortgage payment on that mortgage is $1,100.
Adding $1,000/month will put many renters above the minimum income they'd need. Keep in mind, a married couple will be getting $2,000/month.
There will be vacancies for the same reasons. People moving up-market.
Highest end homes will also increase in value. Everybody moves up, and homeless folks who are homeless due to loss of income will have a place to live.
Everybody moves up- meaning more homes being built- so you'd expect this to increase house production in the US, correct?
So, despite a disincentive for low payed laborers (like those who do construction) to go to work, the housing market will not just continue, but actually become more productive?
That $1100 a month- doesn't include home insurance, doesn't include property taxes, and assumes a $60k down payment, correct? Seems like a charitable number to pick.
They are already paying rent, and if married, they get $2,000.
If their rent is $600, they would have $2,000/month to save a down payment and then have $2,600 to buy a median priced home. That's enough to cover insurance and property taxes.
The standard down payment is 20%, so a $226k home would be $45,200.
Only if there are empty houses because people can't afford them will that scenario be able to play...
With an ability to command higher rent, renting becomes profitable on properties that were previously not profitable to build on. In the long run, I expect rent to fall relative to the current state of affairs as housing is overprovisioned (using the added income from more rent) and moves more towards a buyer's market. Furthermore, with UBI workers are in a stronger negotiating position so we'll see more work from home which also lowers rent by reducing competition in the cities.
It’s also illegal / breach of contract to increase rent based upon a person’s increased income as well unless it’s outside a lease period. I was told this as a landlord and I was mostly interested in getting a good tenant rather than trying to get the most dollars anyway. A bad tenant costs you far, far more than whatever you’d have increased your rent by.
This is a pretty privileged perspective to have and shows that you may not fully grasp what it's like to be poor.
Do you understand the costs of moving (both monetary and time spent)? Do you understand the cost of most likely having to quit and find a new job (if they are available)? do you understand the costs (socially and mentally) of having to leave your community/family of support?
The opportunity cost of what you are suggesting makes it much less feasible than you make it seem
It is, of course, possible to implement a UBI that is too low to make it practical to move, but I would argue that in that case, it is missing the "Basic" part, because it does not provide enough to meet real people's Basic needs.
The thing that gives "Capital" power is that you have it, no one else does, and you're trying to transform it into some arrangement that over time creates more value than it consumes.
The transformation applied can absolutely be done incorrectly, making subsequent capital value transformations more difficult to accomplish profitably given greater constraints on the means the capital allocator can bring to bear.
Nothing about UBI substantially changes the nature of that system, therefore, the real problem to be solved, (the asymmetry of means between capital allocators) given a system that optimizes toward capital control centralization (more capital fewer hands) without also being paired with wealth ceilings via tax extraction at the top and reinjection at the bottom.
Sure, that would definitely be one area where UBI would assist with but as I mentioned in another comment - it would kind of defeat the purpose of the UBI if people had to spend it on mitigating the consequences of people taking advantage of them receiving UBI
I don't have a good answer either... I just agree that UBI seems like a net positive.
Poor people don't have functional families or communities of support in a lot of cases, that's why they're poor.
it would kind of defeat the purpose of the UBI if people had to spend it on mitigating the consequences of people taking advantage of them receiving UBI
It would kind of defeat the purpose of making money with a job if people had to spend their earned money on mitigating the consequences of people taking advantage of them receiving money.
So... the takeaway is strive to earn less so you get preyed on less?
I don't agree. Jobs are much more than just income. They provide purpose, skills (possibly for life and future work), experience (in general and for acquiring future work), possible medical or investment benefits, connections (social and for future work) etc. All these things mean that there are many situations where earning less or having to move would be outweighed by the benefits.
This is not the case in my example - UBI is JUST income. If the providing of UBI creates more problems and negates the income, then it loses its benefit and purpose (not saying this would be a guaranteed problem inherent to UBI, but that was the premise of the OP)
I actually think that would be a better solution than UBI, figure out what American public housing has done wrong (namely the idiotic towers in a park idea) and fix it, say by producing lower density functional neighbourhoods that have proper streets, places for business, community services, etc. and just build masses of them. Housing is the biggest cost after all and it's a large public works project that could be carried out everywhere. You'd have to fix the problem of corruption in projects of that nature though and that's unfortunately a much bigger challenge.
There was an article on here a while ago about a successful undertaking in Greece to build massive amounts of new housing without major public investment, maybe just do that? https://www.bloomberg.com/news/features/2020-07-15/the-desig...
I think an issue with this approach is that it's top down, as as mentioned in the article, "those at the top can’t manage all the information about the economy".
A counter-argument may be to just let towns and cities decide what to develop then, since local people have the best information about their neighborhoods. However, 1. this is already the default method and has resulted in housing crises where NIMBYism is rampant. 2. UBI would also help in this case as you're increasing the demand for housing while increasing competition between people living there and not (assuming people want to move to the area in the first place).
What you are saying would work perfectly for a young college graduate, without much family or friends, who has no dependency or no one dependent on them.
Now imagine a young single mother or father that depends on their family for babysitting or caring for the child while they try to become functioning member of society.
Imagine someone with some health condition that needs access to certain medical facilities.
People live in cities and migrate to cities because they can access schools, colleges, entertainment, public transport, medical facilities, better opportunities, parks etc etc. They can't just pick and move and uproot themselves.
I think people who work in technology do not have enough exposure to the poor and struggling members of the society. I grew up in a really really poor family and when I talk to my coworkers it is very apparent that they don't understand poor people.
I am not a young graduate, uprooting now would be a big deal for various reasons. Neither are my friends in their 30's raising families - some of which are living with their parents for the kind of reasons you describe.
My point is that without being so close to the financial edge all the time, even less well off families can take a step back and make decisions that work best for the future. The stress associated with risk (like quitting a job) results in a scary amount of lock in for many people I know.
I'm pretty lefty but I sure wouldn't go so far as that. Tell them not to bleed the tenants totally dry. Try making rules. Try enforcing rules. If that doesn't work, THEN we can talk along 'kill all the landlords' lines, but I am just not convinced it's that simple.
I think there is room in a liberal market capitalist system with social supports (such as UBI, which is nothing more than a lower overhead social welfare system) to allow people to have property and stuff without it automatically going to Mao's worst nightmares. Yes, people are greedy, but that's not the only thing in the system.
That makes no sense at all. UBI is just an income redistribution scheme, thus it can only work if it's linked to productivity. Otherwise you create a system that's bound to fail and collapse in the times it's needed the most: an economic crisis.
With food stamps, and other welfare programs that already exist to cover your other costs you don't have to work to be able to afford living anymore. Sure you can't go anywhere or have a fancy new phone or car but your income from work could pay for those things instead of just barely being able to stay alive.
I don’t like this solution because it is a pretend-solution. What are the causes of poverty? Prevent them. What are the barriers to mobility in the job market? Alleviate them.
UBI helps but in my opinion it is just sweeping the problem under the rug.
Value capture by capitalists. Perverse incentives of means-tested welfare programs. Making choices that are suboptimal from an expected value perspective because they are better from a risk perspective when you can't afford to take risks.
> Prevent them.
UBI prevents or reduces all of those causes.
> What are the barriers to mobility in the job market?
People not having the resources to take time off their current job to retrain, either via formal training program or taking temporary lower-paid work in a different field, among others.
> Alleviate them.
I don't get why this one fear "omg rents will skyrocket!" gets trotted out as The Reason UBI will fail.
Prices will go up by some percentage of the basic income amount, but that percentage will be less than 100% of the difference. The landlord might raise rent from $1000 to $1600, but not to $3,000.
But what I am saying is that theoretical value for the new rent amount in that pricing model is $3000, not $2000 like the other poster was saying. Thus their arguments don't work.
Provide them access to the education you received (starting with primary school, not college).
Prevent their exploitation by the companies. Especially those that we often work for!
I would bet a better effect can be realized by investing in public education at the primary-high school levels. Make teacher salaries competitive with engineers. Enable all schools to have the equipment and teacher qualities they need.
The main issue in the world at the moment is income inequality, the things that you are listing stem from that, you can't fix education inequality without first addressing the income issue - UBI proposes that we tackle the source of the problem rather than trying to patch things up downstream
I'm assuming you accept that the poor are getting poorer and the wealthy are getting wealthier - how do you propose to stop that without UBI?
I do agree with the regulating capitalism better part. I just wish I had a better idea than repeating Paris 1794.
Because that money is coming from the rich. Would you say your boss/employer has less power over you the more you make? IF that is the case, it's not because of how much you make but rather because of how much value you have to the company. In the case of UBI, there is no value exchange, only a handout. If there is a value exchange, it's merely the prospect of less riots/civil unrest.
(This is not even to mention the wash effects of inflation, which are covered well in the other comments on this thread)
UBI will help the destitute, but if the person holding the purse strings, be it a billionaire philanthropist, the government, or your employer, and you're dependent on that to survive, that gives that entity power over you.
Take government grants and other forms of funding received by universities. Sure, it sounds nice, but the result is that institutions slowly begin to depend on these sources of funding to the degree that their successful operation and even very existence depends on them. This puts universities in a very dangerous position and this dependence has been used to steer universities in directions they might not otherwise have gone.
oh, all my tenants have an "extra" $2,000 a month? they can pay more. housing is inelastic so tenants are the ones who have to bear the increase.
and because building housing stock takes time
and because of zoning restrictions and other institutional constraints
and because of cultural reasons (e.g. to live near family, bc they prefer living in a certain environment like a big city etc.)
and because you (almost literally) can't live without shelter
Not really. If the Earth's surface was populated at the same density as, say, Paris, that would be over 3 trillion people.
> and because building housing stock takes time
Not a whole lot of time actually with modern techniques. See the speed at which some of the Corona hospitals were built.
> and because of zoning restrictions and other institutional constraints
Which only apply to existing cities.
Right now there are houses in the middle of Iowa - or even Detroit - that cost a small fraction of what a house in a city with good job prospects costs. If UBI became a thing, people would be able to move to those places. Not everyone would want to, but some would, and that would be enough to move the prices.
I'm willing to concede UBI (or other unrestricted cash grants) could impact specific segments of a market. But, I can't find good evidence one way or the other that those negative pricing impacts offset increases in productivity, wellness, etc.
Over the same time period that loans have become easily obtainable (via US government backing), massive amounts of regulation has also been imposed on colleges/universities.
While people love to talk about football stadiums, luxury dorms, and other amenities, one of the largest increases in the cost of running a college is administrators to keep up with regulatory demands.
I'm not claiming administrators are solely responsible, only that it's not as simple as "Uncle Sam gives students money and college spend every penny".
Additionally, public funding of colleges has dropped over the same time period. As of 2018, state funding of public colleges was down ~$7 billion since 2008. It was slashed during the down economy, but never brought back up again.
The rapidly increasing headcount growth, including professor headcount growth is driving the increased cost which is driving increased borrowing.
Universities need much bigger class sizes, many fewer professors, and many fewer administrators. Overall headcount at universities needs to shrink by ~70% to get the cost back inline.
No politician, or university president is going to say that because it would be so brutal to oversee. But... students are suffering with massive debt loads and someone is going to have to make the right choices to cut those costs.
I wonder, however, if administrations just take on a life of their own and grow bounded only by available budget. It seems like this happens in the private sectors with layer upon layer of management.
We have several teams of developers pushing out state-level regulatory updates to our software (and these updates are frequent and often done on short notice), plus more teams doing annual federal regulatory updates.
And again, I'm not claiming this is the largest contributor, only that it's one of many reasons (easy access to loans included as well).
find a pass-through effect on tuition of changes in subsidized loan maximums of about 60 cents
on the dollar, and smaller but positive effects for unsubsidized federal loans. The subsidized loan
effect is most pronounced for more expensive degrees, those offered by private institutions, and
for two-year or vocational programs."
I've looked, but all I see is conjecture. Nothing academic. The academic articles I do find tend to assert the opposite - that any changes in consumer prices are smaller than increases in income, granting the recipient more buying power.
fwiw i noticed above you mentioned that there will be an increase in productivity, wellness etc. although i tend to agree with the wellness aspect (esp. compared to our current circumstances) the degree to which wellness would increase is also unclear. for some colinear studies, i'm thinking of finkelstein's work on medicaid expansion in oregon where they found exposure to medicaid increased reported well being of recipients.
and i don't think productivity increases under a ubi holds water on theoretical grounds.
you seem to be assuming large increases in productivity and wellness and other benefits and then asking if inflation will erode that, when we also need to consider that the possible benefits will themselves be attenuated, particularly for those already at lower incomes or those who will earn a ubi.
UBI would allow an unprecedented level of freedom for people to relocate with little risk, and that would itself have a massive influence on city make-up and the housing market. If a lot of the unskilled labor in the bay area actually chose to move somewhere else, wages for those people would either have to increase greatly to meet demand, or the area would finally have to allow much more cheap housing.
I imagine other shifts like that would play out large in small in almost all aspects of the economy. UBI entirely changes everything.
* employer wages for low-demand workers will drop, as competition for low-demand workers will not increase, and those workers will accept a lower wage reasoning that the UBI 'makes up the difference'
* if employer wages are not allowed to drop below a certain point (the minimum wage), then more disposable income will create increased demand for scarce resources (e.g., housing that is a bit better than currently occupied) thereby causing prices to rise.
I'm no Econ major, so happy to hear how my reasoning may be in error.
The logical leap that you are missing is that prices don’t always rise quickly enough as a response to increase in wages. What a person is willing to pay is only part of the pricing equation. You also have to consider what competitors are charging and how much potential margin there is to play with.
Inevitably though, all prices consolidate and all players in the market will charge more to meet the increase in wages, it’s just a slow process.
The only time it happens quickly is if each business conspires to raise prices simultaneously, which isn’t going to happen or may be illegal.
So yes, increase in wages or handing out UBI inevitably raises prices after a period of time, necessitating the need for even more increase in wages and more UBI. It’s not a one and done thing.
Because housing expenses are generally the single largest expense in any household budget, that means landlords are going to reap the majority of the benefit here. People selling homes also know that wages have gone up and by what amount, so this will impact the sale price of new homes. So, any amount of UBI would end up being a huge cash transfer from renters to landlords and other existing homeowners.
Isn't the other part of Adam Smith's supply and demand stuff the idea that competition will drive down prices? Sure, everyone's got another $2,000, but if I can undercut the guy who's trying to mop it all up, wouldn't I? And wouldn't someone else try and undercut me?
Wouldn't that bring prices down? And if not, why not? If there's another larger force at work keeping prices high and keeping people in poverty -- and if poverty is something we want to do something about -- doesn't that suggest that we need to constrain sellers' behavior in some ways we aren't really doing now (like laws against gouging)?
All prices? No. Clothing is now effectively free, for example.
Prices of necessities are the only things you want to watch. Basic food products, healthcare, etc. Those prices have risen around the same as the rate of inflation or spiraled out beyond. Food prices cannot outstrip the inflation ever, because of food subsidy and/or ebt which is tied to it.
For food, some people buy bulk staples and some buy high-end food at Wholefoods.
The degree of substitutes and variety available on the market is staggering for consumer items.
We've seen this with higher minimum wages. The amount of inflation is much lower than than the wage increase, and poor people end up with more buying power.
It should also be noted that inflation is not immediately present following a cash stimulus. It takes time for inflation to set in as a response to market conditions and as such inflation is measured as an adjustable change over a given period of time. That said specific single time examples of UBI not adjusting inflation only demonstrates a faulty understanding of economics.
Where do you think government's money come from? Financing UBI will require raising taxes.
empirically, however, things are sticky and so we have not observed concomitant decreases in employment with (small to moderate) increases in the minimum wage. my other guess (not sure if this is supported by the literature) this can also be because not only is the market sticky, but because workers were being paid a lower wage than their employer could have afforded.
There is plenty of literature that contradicts your assertion. Here are a few links...
What the other replies have failed to consider is that UBI is just injection of cash. It isn't a voucher for a specific class of goods, such as rent. It is just cash that can be used for absolutely anything. If that means burning cash on a $5000 handbag then so be it. Inflation is literaly the injection of cash into a market.
The problem with inflation is lost value. Cash is an abstraction of value to conduct an exchange. The real world worth of that abstraction is variable. When the availability of that abstraction increases disproportionately to a real world value it will be able to purchase less. The most common reason is that prices increase to follow the increased availibility of cash, but there are other reasons as well.
When everybody equally has uniformly increased purchasing power the natural counter-reaction is to reduce availability of goods and services. That can mean raising prices. It can also mean removing goods from market to make them more exclusive. Any means of restoring value to the prior state will happen to lower disruption to the transfer of goods.
Had you read the wikipedia article it would have addressed everything I just said.
Australia currently has a program where anyone impacted from the effects of the pandemic, receives $1,500 a fortnight- and yet is experiencing deflation. The very fact of this debunks your argument, as it is a significant portion of the population who is now receiving a cash injection. This money is not exclusively for rent, nor is it tied to food stamps; it is $1,500 to spend as you wish.
Further, The Reserve Bank Of Australia is in favour of these payments.
And it's also worth noting, many economies have an inflation target of about 3%, which indicates that inflation is healthy and to so staunchly avoid anything that may affect inflation is a fools errand.
Regardless, please read more than a wikipedia article before holding such a strong opinion. The other commenter called you out for being lazy, and I wholeheartedly agree with them.
In this case the goal of stimulus is inflation and it isn't enough to repair the economic disruption.
Despite the sharp and historic deflation this is not unusual though. Pandemics are historically known for economic deflation. Europe experienced a devastating pandemic about once a century for more than 10 centuries in a row yielding plenty of economic evidence to this.
The most important thing to learn from this is that a sudden economic deflation hurts poor people and corrections insufficiently help poor people. Wealthy people are not directly impacted, at all. Attempting to correct for that difference with an economic stimulus, such as giving poor people cash, does not at all balance that disparity.
If anything this current pandemic illustrates that a UBI is an insufficient control for balance. Instead of focusing on what to do about poor people if the goal is to balance the disparities of wealthy people against poor people then wonder what to do about wealthy people. Tax the shit out of wealthy people and use that increased government revenue to grow the economy directly in ways only business can: increased infrastructure (there is more to that than just roads and telephone poles).
As for taxing wealth I am a huge fan of a complete estate tax and not a huge fan of income taxes. Take everything greater than $10 million of estate value when a wealthy patron dies.
They're also time-limited, and the funds come from outside the test group. An actual UBI at scale would need to be effectively permanent and self-funded.
What the tests have shown so far is basically that if you pump a bunch of outside funding into a small community it tends to make most of the recipients a bit happier. Which isn't much of a surprise. They take the opportunity to improve their employability because the experiment is going to end soon, leaving them to fend for themselves. Who can say whether that effect would still be there if the extra income were guaranteed for life? That certainly doesn't seem to be the case for many lottery winners, and many people who inherit wealth from responsible parents end up spending it frivolously.
WFH directly affects the relation between work and place to live. If that doesn't greatly impact rents, neither will UBI.
On the other hand, if it does,
there's not much more to gain for UBI.
Maybe it's just my bubble, but unless someone had a tech job, they seem to hate WFH.
Both Barclays and Lloyds for example have flagged that they expect to reduce the size and number of offices, with Barclays' CEO saying "putting 7,000 people in a building may be a thing of the past".
I don't think it will be a quick process, not least because there are a lot of long term leases in place, but odds are a lot of businesses will use e.g. expansion or leases expiring as an opportunity to experiment with more working from home to see how it works before making new long term commitments, and assuming it works there is every chance there will be increasing pressure from shareholders etc. if people see competitors slashing office costs dramatically.
> In his latest remarks, Mr Staley appeared to cast doubt on the idea of abandoning those hubs, saying: "We also have a responsibility to places like Canary Wharf, like Manchester, like Glasgow."
> He added: "We want our people back together, to make sure we ensure the evolution of our culture and our controls, and I think that will happen over time."
Which sounds like more of a question of how to handle the fact they're sitting on vast amounts of land in long leases in prime locations and have realised leaving offices empty without being able to point to economic benefits will lead to all the wrong kinds of attention, while realising that it will take them time to make it happen smoothly.
Also further down in the article, it points out this:
> However, not all big banks take the same view. Last week, NatWest told more than 50,000 staff in a memo that they could continue to work from home until next year.
> The bank, then known as RBS Group, said it had been reconsidering how the bank works "in the longer term" and intended to tell staff about "future ways of working" later this year.
It's clear it will take a long time before things starts going back to normal any way, and every month these employers have to adjust to working remotely, and recover efficiency while working remotely, the incentive to go back to big offices will drop.
I also know someone who worked at UBS when they moved into their new London offices, and they'd totally ditched fixed offices for most staff and moved to hot-desking for everyone, with the intent of significantly reducing the proportion of staff in the office at any one day. That was well over a year ago. Many of these banks have been looking for ways to reduce their office footprints for years already.
I have no idea what UBI would mean for low-wage, on-premise jobs. A sufficiently substantial UBI would undermine such jobs, I guess...
In theory, yeah, sure, that is the textbook phrasing.
But the lowest tier jobs that are going to be affected is this scenario aren;t remotely close to the largest percentage of total wages, so I can't see any huge shift being induced.
UBI affects the cashflow of those making more than just subsistence money less and less, and I think that diminishing percentage is an aspect of this that gets lost in the battle of philosphicals.
IMO I don't believe those people doing miserable jobs with low pays take a significant part of wage expenses, related to higher managements. If there are data about proportion of the wage we'll get more information.
When it's not tolerable, people leave the cohort and move down a grade, to lower quality and therefore cheaper housing.
Obviously it's not tolerable if you don't have enough money left for food & essential bills.
Not sure why iPhone & Netflix come into this, because they are so extraordinarily cheap compared with rent, food and bills. But of course a phone is essential, and an iPhone very useful, cheap (on contract) and arguably essential these days - for some people it's their only access to the internet. People would not find it tolerable if they couldn't afford a few nice, cheap things, such as Netflix.
When you account for rent, food, bills and a few nice things, as far as I can tell that does take up all the income for many. Have you noticed that a lot of people aren't saving anything?
Of those who are saving, mostly they are saving for a deposit on a mortgage, and/or a pension.
Theoretically a nationwide increase in discretionary income could create new classes of goods that would be desired enough to compete with rent and phones. Or it might not and people would just spend more on rent and phones up to their new limit. Phones would probably move upmarket to capture this revenue as they are essentially globally competitive. Rent would not as much due to the nature of housing supply and the effort of moving cities.
And Netflix is $9/month. C'mon now.
If you increase the housing supply, the price falls. Increase it to a point where there are some vacancies and suddenly landlords don't have as much bargaining power to take your entire UBI. At some point a landlord is going to say
"well better to fill it for $900/month rather than let it sit empty".
I think a huge part of UBI is making the economics of the essential things in life work out so normal people have the power when it comes to basic needs.
First, let's consider the price of the rent. Assume for a moment that somebody manages to fix all mental health problems, alcoholism and so on, and that magically everyone manages to find a good job that pays reasonably well. This is supposedly the dream land of the pure capitalists: everyone works and is productive and so no handouts are received. Well, what would you suppose happens to the rent in this situation? If everyone is able to pay, then rents would go up, wouldn't they? So the difference between UBI and this is only that in one case people don't necessarily have to work, while in the latter case they have to spend 8+ of their lives doing stuff they may not like.
What this means is that your main point is simply that you don't want people to have money to pay for housing, because that may make prices go up for you. You are literally advocating that some people must be homeless so that life for us is easier.
Secondly, the rent argument consistently ignores the fact that if you don't have to work, you can go live wherever you want. One could go live in Alaska and buy 1km2 of land for 10$ because who gives a shit? construct their own igloo or something and then live there forever. This would additionally free them up to spend a larger part of UBI on other products. Instead there is this weird assumption that people will forever cluster in SF or other highly populated centers, because apparently humans are ants and like to breathe pollution.
In any case, while that is the obvious conclusion (as you’ve stated), I never took the position that we merely need to fix mental health etc. I am not saying UBI will work but will make prices go up so I don’t like it.
I am saying that UBI won’t work, it will in fact make inequality worse, AND there’s a solution that will work. It’s the LVT. Once we have LVT, then we could do UBI and the upside would not get absorbed by landlords.
It’s odd to me that you’re claiming that I’m being dismissive of poor folks but you’re literally advocating moving to an igloo in Alaska as a solution?
For the other point, UBI as I know it must be financed by some sort of increased taxation of the rich, it is not the government blindly printing money and distributing it. I don't know whether that taxation should be LVT or something else, I'm simply talking about why the argument that UBI doesn't work due to rent is, in my opinion, incorrect.
How does LVT help poorer people live in cities? The competition for clustered housing continues, that's a fundamental cause.
Richer people still have an advantage over poorer people in economic competition. Instead of people renting and landlords scooping up all the UBI, with LVT you have people competing to buy housing and LVT scooping up all that people can obtain (whether it's UBI, earnings or something else).
Poorer people don't have much luck buying housing in the first place, because of mortgage gatekeeping, even when the actual cost of purchase (mortgage payments) is significantly lower then renting. Even when they do, they pay more for the same level of housing in the end (mortgage interest).
So a switch to a city economy where housing is primarily based around purchases would seem to be not so good for poorer people trying to live there, unless something can be done about access to long-term credit.
1) Public investments such as subways yield increases to public coffers (today, the landlords who happen to own land near a new subway station get a windfall off the city’s billions of dollars of investment). This would incentivize public investment.
2) Land speculation goes away, and development is strongly incentivized, so more units come online and push prices down.
3) Both of the above improvements, as well as private investments made due to public/communal value (such as HQ2 not being built in the middle of nowhere), would funnel huge amounts of money to public coffers. We as a democratic society can decide if we want service workers living in our cities (I reckon anyone who lives in reality does want this) and have the resources to fund making that possible. Things like functioning transit systems go a long, long way.
It means there are better incentives to build denser housing (redeveloping doesn't increase your property taxes, but as your area gets more desirable your land value tax goes up whether you redevelop or not) and public transit (because the city can fund it off the land value increases). So there's a bigger supply of clustered housing.
> Poorer people don't have much luck buying housing in the first place, because of mortgage gatekeeping, even when the actual cost of purchase (mortgage payments) is significantly lower then renting. Even when they do, they pay more for the same level of housing in the end (mortgage interest).
LVT helps a lot with that as well: property becomes less good as an investment, and you don't get to pay lower property taxes just because your bought a while ago.
It depends on why people want to live in cities. The people who are living in cities mostly for the vibrant community will probably want to stay there. The people who are living in cities because they can't get a job outside the city will no longer have that constraint, and some of those people will move away. Not everyone has to move away for competition to decrease.
For $500/mo sure. But if it's like people say and landlords try to raise rent $2k/mo like people are saying, then yes people would definitely move.
Also you could easily save $500/mo right now by moving from a big city to somewhere small. Right now, without UBI being a thing. The rent difference under a hypothetical UBI rent increase would be far more than $500/mo.
Rent is an auction, so there is a dynamic/negation about living in a place. It's not true that rents go up if "everyone is able to pay" - only if "everyone is able willing to pay"; where are competing cities with lower rents in this example?
That would be contrary to about 300 years of economic theory, so if you can prove it there's probably a Nobel Prize in it for you.
Increasing the supply of a good or service will only push the price down when enough of the demand has been satisfied. If the demand far outweighs the supply you're not going to see the price budge for a long long time.
This is basic Econ 101, not Nobel prize territory.
But yes, we should probably fix that before we implement UBI.
Today, your tax liability is tiny when you do this. This incentivizes landlords in hot markets to keep their land off the market, thus making the market hotter, this further incentivizing speculation, etc.
This is why you see empty storefronts or empty lots in incredibly expensive areas. The owner can sustain the cash flow loss today in exchange for higher prices tomorrow.
LVT would mean your tax burden is the same (moderate to high) whether you rent it out or do not rent it out, thus making it infeasible to sit and wait for a higher price tomorrow. This would bring more units onto the market and more efficient uses, thus bringing prices down.
Since LVT is often proposed as replacing other forms of taxation (or at least dramatically reducing them), the cost of actually building a dwelling or storefront also goes down — thus further incentivizing non-speculative behavior.
My only issue is that you end up making the govt more of an arbiter of what "value" is than it already is, which can end up causing issues.
1. The government today assesses land value. It also must assess the value of far, far more nebulous things that can be hidden, transfigured, created/destroyed, or moved offshore. Yes more importance would be tied to this singular assessment, but this assessment is singularly easy to assess!
2. The price/value itself would be set by the market. The assessment of that value, of course, would be by the government and you are correct there is risk of differential here (though mitigated by point 1)
3. Lastly, because land cannot be created, destroyed, or moved, a tax upon it is uniquely unable to either incur inefficiencies (deadweight loss) or to be passed onto tenants/consumers. This is contrast to every other form of taxation, which incur inefficiencies then get passed onto the consumer in the form of price increases anyway.
The reason why the speculator leaves the storefronts or lots empty is that putting them to use right now would prevent them from being used for something even more valuable in the future. If they could use the property for something productive now without impacting the expected future use they would happily do so and collect the extra income. Coercing them into putting the property to use immediately, via LVT or zoning rules or whatever, is thus inefficient and economically destructive. The speculation serves a useful purpose.
There is very clear profit in buying land for cheap and sitting on it until somebody wants it. Land doesn't depreciate unlike buildings. Building something on that land is often more risky for landowners whose business is pure speculation because at sell time the building will have to be torn down by the next user.
This is consistently evident in real world. It might not be in economic theories and textbooks which are designed only for utopia-land.
There is zero need for a private owner to hold it. The land will not disappear, it will always be there. Government on behalf of the community can hold it just as well without the incentive of preventing others of using it.
This makes land different from other goods where if there were no speculators (dealers who hold inventory) the market would dry up (stocks, bonds, used cars).
Land is in this regard more similar to concert tickets. There are speculators who acquire this limited commodity but their profit stems from preventing others getting them and selling it to them at a later date at incresead price.
Society looks at this type of business as highly unethical.
The land might not disappear, but it can very easily be rendered unfit for purpose through misuse or neglect.
Let's put this in concrete terms. Say we have a plot of land which is suitable for various kinds of development. We have a prospective buyer who is looking to build a house. They like this property the best but there are several other suitable options; let's say they'd be willing to pay $25k, but not $30k, to acquire this land as the site for their home. The home will be worth perhaps $250k (not counting the land itself) with an expected lifetime of at least a century with proper maintenance, and effectively can't be moved once build.
Development trends in this area suggest that in perhaps ten years' time there will be demand for some sort of commercial development—office space, retail, services, whatever. They aren't here yet, but if trends continue then 10 years from now someone would be willing to pay up to $100k for this piece of land. (The other sites that the first buyer was considering for their home would not be suitable for this purpose.) However, they're not going to pay $250k extra for a house that they're just going to have to tear down to make room, even if the owner of that house were willing to uproot their family and move somewhere else.
Without speculation there is no reason not to sell the property to the first buyer for $25-30k and let them build their house. However, this represents an economic loss of at least $70k ten years later (the $100k value to the future developer minus the $30k maximum value to the residential buyer) since the land is no longer available at that time for the commercial development. To make it available at that point would cost around $250k just to offset the value of the house, plus the cost of tearing it down, never mind the hassle of moving the family.
With speculation, there is someone bidding say $75k for the property and the residential buyer picks one of the other available properties instead—perhaps not their first choice, but a good enough alternative. The speculator limits the use of the property to such things as can easily be removed in ten years to make way for the anticipated commercial use. Perhaps that means leaving it empty, though it could also be turned into a park, short-lease retail space or transient housing, something that could easily be cleared up to make room when the future demand materializes. Then, if all goes well and they predicted the market correctly, they sell the vacant property for $100k and make their well-deserved profit.
Of course, it may not all go well, in which case they'll be forced to take a loss. Speculation only pays when you make the right predictions.
> Government on behalf of the community can hold it just as well without the incentive of preventing others of using it.
If government correctly anticipates that the land will have more value in the future, they can act like a private owner and buy the land and hold it until that use materializes. Where this breaks down is that the government isn't risking their own capital in the process; if they are wrong and the value of the land decreases instead it's not the government that pays the price, but rather the public. Which means they have less incentive than a private owner to accurately predict the future value of the property, and are more likely to lose money on average. When they do lose they don't go bankrupt; they just take more money from the public via taxes. This is merely an inefficient, socialized, and corruption-prone version of private speculation fueled by public funds.
Actually, you need water more than food. Why isn't fresh water $1000/gallon? Why do we have discretionary income at all?
Neither UBI nor any other policy changes that.
Housing costs in expensive markets are set primarily by land values and not by the value of the capital/building upon the land.
Yes you can make a dent in the problem it by zoning for more units, but you cannot zone more land into existence in high value areas.
For those who are convinced supply&demand doesn't work for dwellings, buy a rental and charge 10x the market rate. See how that goes. This applies to any business. For example, try selling something on Amazon/Ebay/Etsy/Craigslist. You can charge whatever you like for it. Whether someone will buy it is another thing entirely.
Everyone needs food, too, but ironically it's the unneeded food (like Starbucks) that's expensive.
If you work in an expensive city, pay $2000 for one room, good luck finding a room for $40.
It is precisely the problem that you cannot opt out of the housing market, at least when you need a calm and safe environment to think.
Even when you don't, it is probably illegal to set up a tent somewhere, and legal camping sites are pretty expensive and horrible, too.
How that should go is you get taxed at the same rate as if you had set it at a price it could be rented at, therefore encouraging you to set your price correctly.
That’s the LVT, that’s basically the entire thing.
Nobody pays income tax if they aren't making money. That's why they're called "income" taxes.
Density of land use isn't fixed. We can build in three dimensions.
Also there's tons of land that's hardly used at all in the form of golf courses. We should build cheap housing on them.
Works for whom?
In what way is the increasing ratio of rent to income working for renters?
Where those in power comfortably sit in inherited properties and wonder why the plebs does not eat cake.
I believe in the free market, but the housing market is not free.
Zoning laws are not price fixing. Practically every dwelling in a zone has a different price on it, because of supply&demand.
The assumption of a labor shortage because of low nominal unemployment is incorrect - the gig economy is thin margin as it is even with poor pay. It utilizes the previously "idle" labor in a marginal business model but without sufficient demand in other sectors it only provides a low floor.
If people are less beholden to their current situation and more able to move freely, isn't it just as likely that rents will go down?
(Aside from the fact that plenty of places use mechanisms to control rents, if this is a real problem)
Just because  increases, doesn't necessarily mean  does.
The problem with the high cost of housing in markets like San Francisco, is the wealthy capitalists owing real estate create regulations preventing any new housing from being developed.
If it was true, rents would keep climbing to 90+% of incomes but they don't. It would also imply that any other income income increases or redistribution (widespread pay rises, social security, etc etc) were pointless, you might as well give up on any kind of redistribution entirely.
Of course, if there was a UBI, there would be increased demand for stuff that low income people need like housing and food. That's the whole point of increasing equality! Shifting consumption from sports cars and chandeliers to food and shelter is the goal. But then supply would shift to compensate.
Another advantage of UBI is that even if you do wrongly assume it doesn't result in any net redistribution, it's still beneficial, because it smoothes income over the lifecycle, and a smoother income is much less stressful and unpleasant than a choppier income.
You can't just state that and it be true.
> It's understandable that people think like this in a place like SF where landlords have grabbed up a lot of salary increases, but it really doesn't work that way.
Yet, it does work that way. In every city I have ever lived in, it's worked that way. For rent in particular, any excuse that more can be paid leads to higher rent prices. A company built a new office nearby? Rent goes up. More "affluent" people are moving into a particular area? Rent goes up. And so on.
> If it was true, rents would keep climbing to 90+% of incomes but they don't.
Why? That's not the implication. Rent increases are done in a cleverly predatory way. Often times, rent is increased in small to medium steps but frequently, and the notice of such rent increases is notified in the minimum (if that) time legally required. That often leaves renters stuck because there are other, big surprise, expensive barriers to moving. Rent is a predatory system that maximizes the amount of rent that can be collected. That doesn't mean it goes to 90% of incomes as you claim, which nobody else is claiming.
My overall point is not about just rent. By providing UBI and not putting other protections and improvements in place, a capitalistic society will not just sit around and leave meat on the bones. Things will simply shift and people will still be in poverty. A poor educational system will still be there. Creditors will still be around. Etc.
Those things seem to be due to demand. A new office means that people can make more money living in that location, so are willing to pay more for accommodation there. More affluent people moving to a location means that they must see some value in living there. How does UBI increase the demand for housing in any one place (or at all)?
Will the same happen when everyone makes x more? Only if house ownership costs remain flat. I don’t think that will happen - cost and demand.
In the same way that you declined a promotion because everything would magically got more expensive.
If things simply shift, then there is no reason to expect any of these to change and we might as well implement UBI right now, because it doesn't hurt, right?
If you are middle class now, then for you nothing changes except that your salary might include a line -$1000 salary decrease +$1000 UBI (no, if basic income were enough to retire, you would have retired already).
Things change for low wage jobs, where your employer now represents a share of your income, not all of it, and you can negotiate without fearing of being hungry on the street.
I mentioned this in another comment, but I fear UBI will be an excuse for those in power to have even less incentive to care about other problems like education, healthcare, the credit system, consumerism, etc. I fear it will be the case of "we're giving you free money, what more do you want?" from the government and wealthy.
There are still market forces and people retain freedom to move.
“Predatory nature of those in power is put in check” UBI puts it in check by allowing the market to solve for everything while guaranteeing a minimum market participant power for all members.
Are the buildings x% better to live in?
Are the landlords providing x% better services?
No. The people who work there are producing x% more capital, therefore landlords take that x% and call it “cost of living.” This is not a new phenomenon in any regard, and UBI proponents must answer for it.
If their solution is rent control, then rent control is a solution even without UBI. Which of course it’s not a real solution, because then you’re distorting the price of housing and not going to get your construction/maintenance needs met.
LVT is a tax scheme that lets the market set prices for what it’s worth to live in an area (land rent/ground rent), then recoups that as a tax upon the people who claim special privilege to decide what to do with that land.
“UBI lets all the poor people leave” is not convincing at all.
So, the simple argument that UBI will not increase minimum rents by 2k a month overnight with no improvement in living conditions: landlords will have to compete to get the UBI out of individuals hands. Right now, the lowest income housing isn’t in competition for individuals, it’s competing for government approval and integration. If everyone individually has 2k a month to spend, they have the luxury of shopping around.
The value proposition for service workers in high-COL cities like SF is probably already bad. How would UBI make it worse? At least it'd be easier to move away from those areas. Maybe cities would have to pay serivce workers more to make sure they stay.
Companies can go ahead and pay more to keep them. You know what happens then? Prices go up more.
Where is all this capital flowing to? Landlords. Who didn’t pay for UBI, didn’t build the infrastructure, didn’t employ those people.
Yes, see retired social security recipients as an example. But you won’t find these folk renting in SF on a social security check.
SF’s desire for (inexpensive) service workers is a separate matter.
Do you dispute that?
The mechanisms are the same, though. Amazon putting HQ2 in a city causes rent to go up (higher productivity).
A coal mine developing a new, more efficient train to move coal around will also cause rent to go up (higher productivity).
2. That's a really naive sense of economic productivity. Here is a thought experiment.
A) Let's shut down all of Amazon HQ1.
B) Let's shut down the dams that provide 86% of Seattle greater area's electricity.
Which one of these entities is ACTUALLY responsible for that "productivity" then? And I bet you rents in Seattle without electricity would drop far greater proportionally than they do out by the dams. Rent follows incomes, not productivity.
I suspect you’re used to thinking of an information economy where supply is effectively unlimited and “best services command top dollar” is the principal factor in pricing.
There is a problem with limited supply of units, yes, but in reality the majority of cost of living comes from the second type of payment: the fee for the ground rent. The ground is in fixed supply.
With perfect development policy, prices would still go up, ground rent would continue to be seized by people who had nothing to do with its generated value.
The schools, employers, and natural appeal of SF makes its ground rent high. Landlords did none of that.
Draconian zoning laws dramatically restricting supply?
I love idiots screeching about big tech creating to much demand. Seriously? Too much demand is a bad thing? Hardly! How about reversing the crap zoning laws and NIMBY attitudes so supply can rise up to meet demand?
The SF housing crises was caused by a bunch of selfish people declaring through policy (zoning laws) that they have theirs and don't want where they are to change to accommodate others.
And this is supposed to be an enlightened leftist utopia? Talk is cheap until it can affect you personally is the real lesson of San Fransisco housing politics - playing out rather dramatically. Blaming landlords is laughable. San Fransisco has an embarrassment of jobs brought by the high tech companies in the bay area and instead of embracing them (by letting more housing be constructed) they resent them and blame everyone but the real root cause - severely restricted supply.
For many people, rent + other compulsory costs do exceed or exactly meet income. That’s precisely the problem.
People in power, i.e. those with money, don't like giving up money or potential profit. Without protections in place, prices will simply rise or adjust and people will stop worrying about unemployment. In the end, it just puts a different label on things, creating another category for poor people, and I doubt it actually improves anyone's lives. This is because the problems aren't necessarily all at the bottom. The majority of the source of problems are at the top of the socioeconomic ladder.
Utilized farm land and output per farmer has steadily gone up each year with basic food prices falling as an result. I guess I could imagine that if more people would want to become farmers because of UBI it could lead to farm land becoming more expensive which in turn would lead towards higher food prices. UBI will likely also increase prices for status food where there is a low supply and high demand, so I would expect a rise in cost for food that get associated with wealth and status.
For rent it is more complicated. Low income jobs tend to force people to live in cities that are near industries. UBI would allow said people to live outside cities which tend to have significant lower rent as there is significant more supply of cheap houses and cheap land to build cheap houses. Being poor however tend to have a behavior impact where people want to live close to relatives, which in turn often has the result of people staying in cities even if they have cheaper living elsewhere. It is a possible risk with UBI that in cities the rent will go up a bit in low income areas, and significant in high income areas in order to keep people with UBI from living there.
Of course they will, but that's missing the point. The point is that the newly printed money will no longer enter the economy through corporations (corporate debt) but through people and this will change the fundamental dynamics of the entire system. It's about changing the flow of newly printed money and how it enters our economy. So instead of corporations trying to extract money from the government and banks and using their control over people as a bargaining chip as they do today, they will have to focus on actually delivering value to people and keeping them satisfied.
Employees will not be disposable bargaining chips for corporations to get something from the government or from banks, people will be the focus of all economic activities because that's where the money is going to be coming from.
Consider that in 20 years, there will be x times more money in circulation in the economy that there is today. Right now, all that money has to pass through the hands of banks and corporations first this makes people dependent on banks and corporations; this is an unhealthy and unjust dynamic because it's people who are creating economic value, not banks or corporations. Why is the government assuming that banks and corporations are the most efficient way to distribute new fiat money into the economy? Aren't people inherently better at figuring out what they need?
Look where corporations got us, people are effectively being told what they need through targeted advertising.
We could give people money, or we could say "up to so many kilowatt/hours this is free" or "you are entitled to this set-amount of groceries for free". Or to combat prices that inflate for UBI, the government could be reporting what is a reasonable price.
Man I wish I had taken economics. I truly don't know all the ways this could harm us.
The point of the article, is that centralized planners are really bad at calculating these things, thus the eventual collapse of the Soviet Union and China moving to a much more market based economy.
I could see society changing as well. If 20 people got together and formed a commune, that commune is essentially self maintaining as they get an income, can grow their own food etc.
Currently, women can be stuck in abusive relationships which are challenging to escape. Having a reliable stream of incoming money can help then run away.
But I agree, abolish alimony and let UBI take care of that, so both spouses can freely go their own way if desired.
Bankers are the first one that will eventually support UBI legislation in the US.
Because they understand that UBI will be a profit center for them without some sort of limitation on predatory pricing and lending.
1. The increase in demand will first short-circuit the supply of basic essentials.
2. Banks will be the first ones to step in the gap to finance companies working to meet UBI demand
3. Then eventually over time, banks will begin extending credit to overextended UBI-powered citizens. The citizen is the conduit for government-to-bank revenue exchange.
If target and walmart, currently competing for business on opposite sides of the same street, both raise their margins on food and clothing in response to the implementation of UBI then they are clearly colluding and I would hope that an enormous antitrust thing would ensue.
But I'm no expert. You may be right.
It would be difficult to have predatory pricing if there's a suitable, free alternative.
It would take magic. The markets for most basic necessities are reasonably efficient. There's no major monopoly on them and it's not that hard for anyone to enter the market.
If scarcity was a driving force in creating the competition that capitalism deems necessary, then there would be no point in hoarding or passing down more wealth than could be spent in a lifetime. So, it's an obvious mistruth.
And if the price of all things will increase because some people are no longer starving and able to afford to pay more, perhaps that's a fair trade. We will optimize for more convenience, higher quality, and more novel products, then.
Perhaps this only illuminates how close people who feel they are doing well are to the people that take most of the prejudice for their lack of wealth. Maybe being a small business owner doesn't put you in the same world as Wal-Mart any more than being white and working class makes you basically equals to Elon Musk.
Perhaps it's the tide that lifts all boats and not how many have sunk around you.
It's called supply and demand, nothing magical about it. The only thing magical is leftists thinking this won't happen.
Housing is its own story because anti-development policies have constrained supply, which artificially forces prices up. However, 1) it's important not to conflate it with cost trends of other basic needs, and 2) there's a strong argument that increasing base-level income also increases mobility to lower-cost areas, which has a stabilizing effect on housing. The few reputable studies on UBI-equivalents I've seen show pretty minimal price inflation in comparison to the income gains, for example .
It may be the case that in countries which spend less on health per capita than the US wait times tend to be longer on average (and I'm pretty sure the data says this isn't universally true), but that's not an inherent property of the single-payer system - and wait times for someone who would never be able to afford the surgery they need under the American system are infinitely shorter.
So you really think that the demand for, say, hip replacements, will grow indefinitely because the recipients don’t have to pay money for it?
> the nature compensates by limiting supply.
Which nature, and how does it limit supply? I can’t think of any reasonable interpretation of that statement that makes any sense.
There's nothing inherent in single payer systems that forces long wait times. And in my experience (Sweden), when you need care you get it. That in contrast with that it proved almost impossible to get to see an in-network doctor when I lived in Michigan.
When the government can just take your money out from under you, that starts making politics quite important.
Do note that there will need to be provisions for changing the amount of UBI. At the very least to index it to inflation. Heck, refusal to raise UBI for inflation for long enough would already screw over the people who depend on it.
this is pretty much an axiomatic property of the power concentration required to implement broad-scope social programs enforced by the state.
The problem I have with this is “who gets to define what is and is not a horrible job?”
Just not liking your job can’t be the litmus test here. If 95 percent of people doing a job thinks it’s a fine job and 5% hate it, does that make it a horrible job? What about 5% and 95%? When does a job become horrible?
Also, what about a generational change in attitudes or a difference in attitudes between regions. There are jobs I did that I consider decent honest work that I put myself through college doing that many people twenty years my junior would not even consider. There are jobs city folks would do that country folks would not do? There are jobs immigrants are fine with that native born citizens would consider horrible.
For those of us working hard and paying lots of taxes, we have expectations here since it's the fruits of our labor that are paying for all this. If we're expected to work so others don't have to, there needs to be solid justification that those of us still working agree with.
People would still want money. UBI isn't going to be enough for a lavish lifestyle, people will still want to work. It would make lower-paying activities like art/open source more viable though.
Not really. The income tax didn't exist before 1913 and the government was way smaller so there wasn't a even need to collect a lot of taxes. Are you thinking of the 50s? Because even in that time people just avoided to declare all their income (it was easier back then) or used other loop holes to avoid paying taxes 
Not to mention a lot of other social programs that would be folded into UBI and eliminated overnight. Social security, food stamps, rent assistance.... That's not enough savings to pay for UBI, but it's an appreciable chunk.
And the existence of UBI would imply the existence of a national registry, which would drastically change the equations regarding illegal immigration. Border enforcement becomes a lot less important to some anti-immigrant demographics, if those immigrants cannot receive any welfare. Police for fraud, sure, but maybe you don't need as many fences and armed guards patrolling the border?
I'm just saying the knock-on effects of such a drastic shift in society would be huge, so expecting a simple comparison of current costs and revenues is so simplistic that it's guaranteed to be off by a lot.
From welfare state: By giving it unconditionally.
From socialism/communism: You're still allowed to own "means of production", and you're also still allowed to try to maximize profits etc. as a company. Private property, especially owning a business privately, is still a thing.
> What incentive would there be for people to work?
You work because you want to lead a somewhat nice life, where you're able to afford things. UBI (at least the more serious proposals) would cover just the very basics: You'll be able to afford a roof over your head, food and other such basics. Want to afford some nice things? Need to work.
And this is in my opinion the beauty of UBI. Doing a crappy job until the end of my life for a crappy salary that doesn't get me anywhere? No way. Doing a crappy job for a while until I've saved up enough cash to afford something I want? Why not. It incentivizes to make crappy jobs that nobody wants (unless they must) more attractive; accelerating their automatization (see e.g. the garbage truck examples in this thread - people running behind it vs. having an automated crane to do it); giving power to those who currently have no option than to work whatever they're given, no matter how much they dislike it.
Exactly! I think there was an Article in the NYT a few months back about some Scandinavian experiments with UBI - they gave a bunch of people UBI to see what happens. If I remember correctly, there was a story about one guy who was previously on welfare, and creating some sort of hand drums was his hobby and he was occasionally asked by others if they could buy some from him, however he wasn't allowed to sell them because otherwise he would lose his welfare benefits. But risking to start a business wasn't really an option either, because it wasn't making enough/as much/as reliably as welfare did so he was really kind of in a crappy situation where he could have improved his life conditions on his own but sort of wasn't allowed to for legal reasons. UBI totally took this kind of pressure from him.
Of course, there were also those who essentially took a year off to essentially do nothing. And if UBI is introduced, there will certainly be a percent of people that decide that they'll just stop working (will be interesting how many come back, once they get bored). But I believe that those kind of people always have and always will exist - thanks to progress and automation, we're in a spot where society doesn't really need everyone to work anymore and still be able to function.
Edit: Or like parent just wrote, it can allow you to bootstrap a small business.
Situation in Germany for unemployment / welfare: 450sqft apartment, utilities included, TV, smart phone, 400€/mo cash. Where are those serious proposals that suggest making the UBI pay less than the current social programs?
The beauty of UBI is that government mandated minimum wage, with all its drawbacks, wouldn't be needed anymore. People would be able to refuse shitty job offers and not starve. Ultimately, employers would have to raise wages but not because of the law but because of workers' better negotiation position.
Ideally the money should come from the elite class that is accumulating the capital thanks to automation and monopolization. A huge part of this capital is currently spent in non-productive ways like speculation, lobbying and luxuries. This is what some socialists and social democrats are proposing, though most agree we have not reached the needed level of automation and advancement yet.
Neoliberals don't really want the UBI anytime soon, they just hijacked the term and are now bastardizing it just like they did with many other good leftist ideas because they found them either threatening to their interests or useful for their power games.
As other posters here have already noticed, "neoliberal UBI" will most likely be used to incite conflict and division between the lower and middle class. They will make the middle class pay the bill while promoting victim mentality and degeneracy among the lower class. This should produce a shitshow that will help keep the wage slaves distracted for the next decade or two until a true UBI becomes a possibility.
Have you done the math on this? The scale of UBI is so large that it has to mostly come from the middle class. A meager $20k UBI for all 300 million Americans would cost $6 trillion. Even if you liquidated the 100% of wealth of the top 400 Americans you'd only get $3 trillion, and you're only able to do that once, not every year.
The hubris in this is utterly breathtaking.
I’m interested in whether something tends to create a society that I think should exist for my children and their great-grandchildren (whom I’ll surely never meet).
Most of those things happen to have market-based outcomes in mind, but I’m open to good ideas that happen to be socialist, anarchist, communist, or any other broad label.
The average worker's income tax rate is ~40%, but they'll also have to pay for health insurance (included in welfare at a subsidized rate), pensions etc.
the real problem is that 50% of the population has a below average IQ. No matter what you do 15% will end up in financial trouble
So, to actually solve the issue you're going to need to decentralize and de-automatize. Otherwise lots of people are going to lose their economic and hence existential purpose.
You just described most jobs. The difference is that UBI would be something like a right, as opposed to jobs where you can be cutoff from your livelihood at a moment's notice.
> instead of earning their own via providing goods to the market (e.g. services)
We need to get over this Smithian vision of everyone being their own little entrepreneur. You'll see the job 'market' acts very little like a utility maximizing market when you get into the details. For example, see the endless posts on this site about 'culture fits' and ritualistic hazings posing as interviews.
A right can be withdrawn, especially as we a working towards outcompeting lots of people using machines. Then keeping a large population would be merely a hobby of the powerful.
> For example, see the endless posts on this site about 'culture fits' and ritualistic hazings posing as interviews.
Right, it is not perfectly efficient, but better than alternatives that are determined top down by rigid rules enforced by a powerful apparatus.
>You just described most jobs.
No. Now you depend on a lot of semi-powerful un-centralized instances, and not just one point of failure. And you can pick your poison according to your tolerance. It is not perfect, but it does not leave you at the mercy of one and only one entity without any recourse.
This is like Google banning you on gmail, and hence adsense and youtube, or Paypal or Visa banning you on their payment network, only a million times worse.
It is much easier to get locked out of the market for jobs that pay a living wage than you realize. If you have a bad credit report or a criminal record, those un-centralized instances start to behave like a single point of failure. And you definitely don't have any recourse.
I don't want UBI; I want people to have some assurance they will be able to eat tomorrow.
The notion of a right does not include material implementation of that right for you by others, it merely states that you have a right to earn it and keep it by your own work and effort.
The right to council in criminal matters, for example, is well established even in the U.S.
The idea that other people owe you specific goods or services just for existing—a.k.a. positive rights—leads directly to contradiction and conflict.
The AARP is a wildly powerful lobby, well out of proportion to the number of their members. People don’t live in fear of the AARP, I agree, but you might ask where does that power originate?
How do you possibly enforce that while things become ever more centralized and automatized. We are already losing to those in power and we are not even a tenth of the way there. E.g. there has been a massive decline of applications of anti-trust laws.
It shifts the power from employers to the state, not to the employees, the state then merely allows the former employees to play a little.
Like proportional representation, approval voting, banning corporate money from politics, etc.
I don’t think most people in poverty will work their way out of it. It’s a mindset and a lifestyle, in addition to a reality. UBI probably won’t change that.
It’s an interesting thought experiment: can you have a society without impoverished people?
Not starving, though, is something that can be directly impacted with UBI.
I'm less afraid of poverty now. More able to take risks. Less afraid of "losing what I worked so hard to get".
I think what you're talking about is "the underclass" - people who have no experience of earning a wage and have lived off government benefits for multiple generations. They definitely have a different attitude to life.
The way "it's a mindset and a lifestyle" reads is very harsh and diminishes the complexity of why poor people stay poor.
The relevant analogy is people telling those struggling with depression and anxiety to just stop being depressed and anxious. It doesn't work that way. There are other problems and barriers in the chemical imbalances in the brain that lead to these disorders. Yes, people with these conditions can have mindsets and make decisions, caused by both the disorders and potentially their natural psychology, that are not conducive to getting out or that got them in in the first place, but those are not the cause. The thinking and mindset is more of a multiplier or a catalyst to the underlying cause of chemical imbalances.
The same thing goes for those in poverty and in the lower class. Yes, mindset and decisions can lead to worse off poverty or a situation where you can't climb out of it. But those are not the primary causes in the general case. (Of course there are always exceptions and edge cases.) What are the causes? In my opinion, it's rampant consumerism (buyers don't just make the choices independent of other influences, they are heavily influenced and emotionally hacked to make the choices they do), a poor educational system, a poor support structure such as the problems with health insurance, racism and many other -isms, general socioeconomic inequalities and segregation, monopolies, capitalism, the credit system, city infrastructure and the requirement to own cars, the movement of jobs into cities, etc. And all of these have secondary effects that all feed into each other. It isn't clear how UBI solves these and doesn't just shift things around. I get the idea of UBI, but it seems to place all the blame on poor people.
So like I said, the situation is complex and can't be summarized by "poor people are poor because of their mindset and lifestyle choices".
I’m not saying all or even a majority, but I believe it’s a substantial subset and understanding the likely effects of UBI on a substantial subset of the targeted population seems wise.
Regarding UBI, I currently can't understand its potential effectiveness when more comprehensive reforms seem to be also missing. People are not being educated, employed, fed, given healthcare, etc., and I almost feel that UBI is going to blossom into this excuse to forget about those problems and thus the people facing those problems while minimally giving them chips to still play and lose at the table.
There absolutely are people who can't currently, or may never be able to, steer their life in a useful direction.
But most people? I'd say instead that most people are stuck in a poverty cycle because society is constructed that way.
When people are given enough money to be able to afford helpful choices, as opposed to scraping along at subsistence level, lots of people find their way to better, more stable, healthier, less stressed lives.
It's only a mindset when you don't have the means to climb out of it.
It's perfectly possible to build in security mechanisms.
> It's perfectly possible to build in security mechanisms.
Sure it is, but there would have to be someone with the power to do so and more importantly the interest to do so. That's something I simply don't see happening in the USA - check their health insurance system for a concrete example. If they're unable to copy the similarly capitalistic but freer system of Switzerland or other countries with mixed private/public health insurance, then what hope is there with the issues I listed and the UBI?
I just wanted to make clear that it's possible to implement UBI. There are many reasons against UBI, but not the ones you gave.
Personally, I'm against UBI for two reasons. First, it does not solve the fundamental problem, which is capital accumulation an ever increasing gap between the rich and the poor. The more money you have, the more money flows to you, and the gap has grown insane. Unless this trend is addressed and reversed, even UBI cannot prevent massive social unrest in the long run. Second, UBI makes it mentally and morally easier for employers to fire people and to lower wages even further. In the end, it will lead to a grossly impoverished class of UBI recipients who will work 6 days a week for $3.25 an hour to supplement their meagre UBI.
In my opinion a classical welfare state, maybe with a negative income tax, strong worker protections, tax-funded education and health care, and strong means to prevent wealth accumulation are the only ways to tackle the problem in the long run. Reforming hereditary laws and stopping almost all "financial products" would be a good start. Right now, once you have reached a certain threshold you can just live off by speculating on Wall Street and juggling around virtual money without ever producing anything of (non-monetary) value. That shouldn't be possible at all.
A deeper problem is that the whole model of existing economy is flawed, because it's based on permanent expansion, which leads to fast exhaustion of natural resources. It is simply not maintainable on Earth for more than 200 years from now.
I don't know how to break this to you, but surely you know there is already a grossly impoverished group of people working 6 days a week for $3.25 an hour without UBI.
If you add the UBI to their income they'll be hugely better off and they might even be able to choose between working those 6 days or staying at home and looking after their children, or caring for an elderly relative without the risk of being made homeless, or being unable to afford food for their family.
Maybe, maybe not.
For clarity, I am a fan of UBI. But I'd like to run through a hypothesis about an adverse effect.
If you add the UBI and costs go up accordingly, the real, marginal benefit they can obtain by working for $3.25 an hour will actually decrease.
This means someone who is in circumstances where they can currently earn a meagre income to tip the balance to being able to make ends meet in that circumstance, will find their ability to work the same amount in a UBI world will not tip the balance to being able to make ends meet.
In other words they will be pushed to change circumstance, towards more work and/or lower cost. E.g. move somewhere cheaper, work more hours.
This does not sound like a net benefit for the already impoverished. It sounds like a trap, because low-wage working will provide less marginal benefit to change what people can afford when they are stuck.
If someone is making ends meet by working at your (illegally low) wage, then having that wage _plus_ UBI means that they are UBI rate / existing wage times better off.
The wage's percentage of total income dropping is a red herring.
No one will be pushed to work more when they have _more_ resources at hand.
That's why I wrote "real", as in adjusted for inflation.
If you want to help poor people, start with radically capping and reducing rents per m^2 everywhere. And by "radically" I mean radically, not just halving them. That's one of the biggest problems in almost every country and it will get worse and worse if current trends continue.
US population is what, 300 million, ~75% of that are adults, multiplied by something like $35,000 is what, 8 trillion? The top 1% have a wealth of 35 trillion, US GDP is around 24 trillion - is it acceptable to spend 1/3rd of your GDP on eradicating poverty and creating a more equal society?
Also, we already depend on "the government" to make available (or protect) some pretty important stuff we depend on: rule of law, public safety, healthcare (in most developed countries), etc..
That is simply an impossibility for the majority of people.
Companies are accountable to customers in the continuous rolling election of the market. You can vote them out of your life at any time. It is the ultimate form of accountability. This is especially good because bankruptcy as a form of accountability can ultimately affect everyone in the company, whereas in reality almost all decisions made by governments are handled by unelected officials who persist across party elections and for which there's no systematic removal mechanism. They can't go bankrupt. In some countries they can't even be removed, as the civil service isn't directly controlled by the elected politicians. Mostly they fly under the radar, screwing things up for their entire lives.
At least with companies there's some sort of limit to how dysfunctional they can get before they lose influence and power.
Already happens, with welfare.
> Predators - individuals and companies will find a way to take your UBI check from you as fast as possible
> Charity - let's say we actually give every person enough money for food, housing, and utilities. Some people will mess up.
Notice a pattern? People who are likely to mess up with their finances / welfare, etc. will likely mess up with UBI. UBI covers a way larger group of people and gives them opportunities and flexibility, I only see that as win.
The 2020 USA welfare state is bonkers stingy and punitive: prove you have these dependents and have been looking for work for this long and have not received benefits for this period...
UBI would be an absolute sea change. It is not some mild extension of "welfare" which isn't really a thing. Go in clear-eyed!
> UBI covers a way larger group of people and gives them opportunities and flexibility, I only see that as win.
How about getting rid of all taxes and just taxing transactions--like VAT, but more, so anytime money changes hands? 2019 was $21T, if you put a transaction tax of 30% in place, you would cover the cost of UBI.
I am normally against flat taxes because they hurt poor people, but if you're giving them UBI would this the negative impact of a non-progressive tax? You'd simplify so much but getting rid of most accountants and the IRS, drop in the bucket but nice to see. They would certainly kick and scream. You'd also collapse real estate prices because cities would lose their need, but would kickstart rural economies like woah. This would help alleviate the rural/urban friction we're currently seeing.
I'm just arm chairing, I have zero background in economics.
Why is eliminating all government services an acceptable hypothetical but not cutting any of the imperial occupation budget? I call it as such rather than the Orwellian “defense” because this is what that money is actually used for.
"Welfare" has a really big downside that it "phases out" (because of a "means" test) which locks people on one side of a "qualification" line.
UBI wipes that perverse incentive out.
For everyone else who is working to pay for it, that's a rather big and fundamental upside.
UBI proponents have an unfortunate habit of engaging in a form of sophistry: by saying everyone gets UBI, they try to pretend the policy has no losers. They forget about the feelings and needs of the huge numbers of people who would be paying for UBI instead of receiving it, regardless of how the government chose to manipulatively print the numbers on your final paperwork. Almost all people, almost all of the time, will just be paying more in tax in order to make the UBI work, so it'll all cancel out for them. Money will come in via UBI and immediately go out again in the form of higher taxes. It must be so because the resources to pay for UBI don't come from nowhere. They come from people.
The reason welfare is means tested is because it's corrosive to society for workers to feel like they're being punished for working. People must work. That is fundamental. UBI makes the fraudulent claim that in theory nobody has to work, because everyone will receive UBI no matter what. This is obviously untrue and would be obviously untrue even to small children. What happens if everyone decides UBI is enough for them and just check out? Who works in the fields? Who builds the buildings? UBI has no answer for this. The dishonesty it would require from government and society would corrode away the pillars on which it sits.
This gets less true every year. The only reason we can't have robots handling almost everything and people living lives of pure leisure (except for, say, mandatory menial tasks one day a year), is because we haven't yet figured out a way to do it fairly. And maybe the technology isn't there yet, but it will be soon.
The problem is that the people who own the robots don't see why they should give away the fruits of their R&D investment to everyone else for free. And they have a point! If you're saying "spend loads of time and money developing robots for us, and then we'll take them off you and you'll be no better off than anyone else", why would they bother developing them?
But in the long term, we need to move towards a world where automation serves humanity as a whole, instead of whichever particular corporation happens to own that particular piece of automation. I just don't know how to do it.
Society must produce at least to feed itself, and people working is the way we produce. No country in the world has fully automated its food supply, no one is even trying! and the US has outsourced a lot of its food supply to third world countries. That is why you think people need to work less and less every year, because the US imports more and more every year. The minute the US stops working is the minute the rest of the world stops sending in food.
> and people working is the way we produce.
We produce more per worker with every year as technology improves. It follows that we could do less work per person every year.
I'm talking about humanity as a whole, not the US in particular, so it doesn't really matter whether people in the US eat food that was grown in the US or elsewhere.
And I don't live in the US.
Not necessarily. We demand more every year.
I'd be fascinated to know what the people working on self driving cars think of that logic. Because the tech is very hard to get right. The problems are not merely sociological.
At some point you have people near the cusp of getting free health insurance and health care. Imagine you are also getting $300 in food for your family monthly.
Now imagine you at some point get the opportunity get a raise and make another $400 per month. You earn a whopping $4800 more unfortunately you lose the food assistance worth $3600 and you end up paying $300 every 2 weeks for health insurance for a 7800 loss then you have to actually pay for your prescriptions and this amounts to another 200 a month or ultimately another $2400.
I have not even touched on subsidized housing which is yet another factor for some.
In the above example taking a $4800 raise would cost you $13800 leaving you 9000 in the hole for a family that can't afford to lose much and still remain solvent.
What you want is for those people to take every opportunity available to progress the incentive you have created is for them to stay a part timer and work the exact number of hours that keeps them on benefits and look for no path upward because every path upwards leads through a space where they are apt to lose their ass and possibly their home.
You have also created an incentive for them to vote more of your money into their pockets in terms of benefits. With half the nation sharing 12% of the income if you let the have not class grow large enough eventually they will coalesce around voting your money into their wallets.
I think there's also a problem with arguing the solution to badly designed welfare systems is a far bigger one. What makes you think it'd be run better? As I point out elsewhere, UBI will still be means tested and still require administration, if only to restrict it to residency in a local jurisdiction.
1. Does the current system encourage work? When you require means testing for benefits and have sharp discontinuities, the incentive to work isn't very strong.
If a full time job pays $x/month and your benefits are $0.8x/month, then taking that full time job and losing the benefits only puts $0.2x in your pocket. That seems like a pretty poor deal for 40+ hours a week away from home. A UBI system which always paid the same amount would mean that any income from work would immediately go in your pocket. That's a very strong incentive to work - working would double or triple your income.
2. The type of work that people _must_ do for society to function is actually quite small. People must grow crops, run the water treatment systems, maintain roads, generate electricity, sure. But there's also a huge class of pointless jobs - pointless admin due to wasteful bureaucracy, entire divisions of defence contractors working on things which will never be used, a huge number of startups spending VC money on things which they have no hope of succeeding at, wasteful processes and systems at state telecom companies the world over.
The only thing we can say about work in our economy is that it is done because someone wants to pay for it to be done. Not that it's necessary. Things become profitable because incentives exist to do them, but often these incentives are artificial or completely crazy.
If UBI significantly alters the economic incentives, maybe that's not a bad thing. Does it really make a difference to society if someone spends their days pushing paper in a state telecom company, or creating art?
There will of course be scroungers and lazy people. There's a lot of people who work right now who do the bare minimum as it is. They might drop out completely. There will also be people who are given a stable safety net from which to pursue a new career, return to education, care for their parents, build a house in the woods, build a business.
I don't think we can say for sure which group will be larger.
We don't have UBI right now, but we do have people who inherit money. And in my experience with people I've known who've inherited enough money to live for a few years, they've almost entirely continued working. The inheritance has given them a safety net from which to pursue a risky career or retrain. It's been a huge positive for them. In inheritance we already have an entrenched intergenerational BI for a group of society - UBI in many ways is recreating that for everyone.
it's for all intents and purposes a religious belief. your word choice of 'fundamental' hints at it. it also disqualifies people with crippling disabilities from... what exactly? right to live? i hope not!
people must eat, drink and sleep. that is fundamental (actually a hard biological requirement). it doesn't follow that work equals food, water and shelter, though it was true for most of humanity's existence up until the invention of civilization.
One of the answers to the welfare means testing trap I've seen is to extend the EITC much, much more. It turns out according to the Andy Sterns think tank that researched it that the cost of such a program would be about $1T off from what UBI would be. Furthermore, such a program would be under incredible attack from the GOP that it'd turn into the sad state of welfare today such as in MS where basically nobody receives benefits while the state collects money for it. The attempts to defeat welfare will never end and given the clown car of different issues that are constantly being eroded perhaps another solution is worth a try to divert the attention of attackers (and also slide other important protections in place as well).
I've never seen any UBI advocate think that nobody has to work and it's a pretty inflammatory and bad faith argument that UBI advocates believe such nonsense.
The reason for using a consumption tax to fuel UBI is that if the workforce drops significantly, this doesn't mean consumption drops, and if much of the revenue produced is from automation or a non-human labor produced value taxing it doesn't seem unfair because no person earned said income directly. What we're seeing in trials repeatedly across even developed countries and concentrated among existing assistance recipients is that UBI recipients don't drop out of the workforce though except for new moms and students, both groups which probably shouldn't be plowing fields and in construction because their contributions to society also are required for it to continue. This idea that people en masse would stop working with UBI is simply not true - do rich people stop working because they have passive income? Not at all
Sure you have.
Ask a UBI advocate what the cut-off threshold is beyond which people stop receiving UBI. If 20% of the population are receiving UBI and aren't choosing to work, does that mean the remaining 80% can't get it? Are they forced to work? How does this function?
You've never seen a UBI advocate address this basic problem and never will, because the entire concept is that checking out of work to live off the UBI payment is a universal right. By definition it's available to everyone. But also by definition it cannot be available to everyone.
In a real attempt to deploy this system, it would be kept in check by inflation. If too many people stopped working the amount of money collected in taxes would fall, so governments would have to print money to continue paying their UBI obligation. This would rapidly cause the UBI payments to become a trivial amount and outcomes would reset to where they are today. If UBI advocates attempted to prevent this fail-safe mechanism kicking in by making automatic UBI increases linked to inflation, all that'd trigger is hyperinflation and civilisational collapse. UBI would die, one way or another. The only way it can survive is if virtually nobody uses it to stop working, but "people can stop working and be super creative" is one of the primary arguments for UBI.
BTW your suggested approach of using a consumption tax doesn't work either. Think about it. The consumption tax must be zero if you're living on the UBI, otherwise it amounts to just a lower UBI. So we can say the real UBI is whatever you receive minus whatever consumption taxes you pay. If "real UBI" is set to some arbitrary number via legislation, that places a hard limit on how high consumption taxes can rise. The rest would have to come from borrowing (time limited) or income taxes (subject to how many people are working, and how effectively).
However, this is also why I believe that there is nothing that could still save the USA. For starters, the changes it would need to prevent it from cannibalizing itself (as most crumbling empires), would require dismantling existing power structures and interests that will not hesitate to destroy everything (civil peace, country, world, everything) to "defend" themselves. Those powers are almost nowhere as powerful as the are in the USA, and I am everything but positive about reining those in. As long as those run the show, good luck with anything else.
Non-mainstream ideas like UBI and RCV are simply suggestions exasperated that things aren't working to avoid a complete disaster and dissolution of the US. Should we keep trying to yell and scream for the same solutions tried for decades and ultimately lost as the GOP has stomped on the fragmented left in the US? To me, the worst of all solutions is to KEEP doing the same damn things and continuing to lose like what Dems did with Russiagate. We might get gay marriage rights, perhaps some civil rights 2.0, and some semblance of Roe v Wade but to me that won't matter if we're in a full blown Civil War a few years from now. Pulling conservatives / regressives back to the middle and into something resembling good faith dialogue again is possible with UBI discussions at least that I haven't found with almost any other political topic in... decades. Granted, that'll be until Fox News gets their hands on it, but beating mainstream media narratives (both left and right) to the punch has been productive.
It's not that there aren't initiatives/option that will obviously improve the current situation. It's that all the decision making paths towards any such progress are thoroughly corrupted and rigged, with the effects of such improvements being diametrically opposed to the personal interests of those who (both overtly and covertly) run the USA.
These are people with a proven track record of "always winning". Meaning, they will sacrifice anything and everything, before having their own interests harmed. Good luck with that. It could prove far worse than civil war. The current political divide that everyone knows the USA so well for (but is mostly a crafted false dichotomy either way), might "evaporate" surprisingly quickly, once shit really hits the fan. The government might quickly turn to "protect the country at all costs", against any form of "chaos" and disturbance of "order" (and no, it won't matter which party will be in power).
On the other hand, even in hopeless situations, people should never give up hope. However, I certainly expect no improvements as long as those who currently consider themselves untouchable, remain convinced that they are indeed that.
Welfare isn't meant to solve addiction but it could certainly kick start someone's life after they have recovered. People think drug addicts don't deserve welfare but a UBI would prevent that stigma because nobody gets excluded.
Really the only valid concern is the first one. The rich have no interest in giving up their wealth but that is only natural.
There are no conditions except for having lived (not worked) in the country for at least 40 years of the 65.
This is basically UBI for elderly and it has been in place since the 1960s.
None of the (theoretical) issues you named have been a problem.
Do some elderly spend all their AOW on a slot machine as soon as it comes in? Sure.
Do some people try to scam elderly because all elderly get AOW? Sure.
But overall the program has resulted in <3% of all elderly living below the poverty line. In other countries without this, such as Germany, you can find older people still having to work well into their 70s to get by.
In fact, the AOW age has been increased from the age of 65 (eventually it will be increased to 67) to ensure the ratio of working population to retired workers is large enough to keep the system sustainable. Even covering just two extra years was considered too expensive. Obviously extending the system by another 47 years would be a huge challenge.
The OP mentioned nothing about that, do you mean "my main concern around UBI"?
FWIW I've never seen a UBI study that has actually found a statistically significant decrease in working among anyone but mothers with young children and kids in school. Granted there's no increase either as some UBI proponents have suggested. It seems to be pretty neutral.
If they weren't getting any pension (aka not having worked their entire life), they'd get welfare, which is about 1000€/month. They'd only have to work if they wanted e.g. a larger flat, or more luxuries. I assume the same is true in the Netherlands: if you get AOW and you want two cars, they don't double your pension but you're free to work and earn money to afford those cars.
The trouble of course is in expanding those programs unconditionally to everyone. If you can get by well enough with 1200€ in the Netherlands, why would a 20yo not opt to live off of the expanded AOW instead of working?
The AOW is a baseline, to keep you from being homeless or starving to death or having to beg for money.
For your last question: there are also people who are content with whatever welfare they get now and don't even try to work to better their lives. Even though everyone could do this it seems almost no one does.
1. AOW, the state pension
2. Private pension system regulated by pension law
3. Individual private pension
Slight nitpick on the AOW, you don't need to live in the Netherlands for at least 40 years. It's by rate, so if you lived 20 of the 40 working age years in the Netherlands you will receive 50% of the AOW (even if you leave the Netherlands).
In my own east european country, we have a stable Roma population (about 10%), of which cca 98% never work. They already rely completely on welfare system, to the point of making enough children to have large support payments (families with 10 kids are common, 15 is not unheard of, although kids are sometimes running around bare naked in the snow).
I can imagine quite a few countries would literally stop if given the option to just now work
I think it should be pretty clear today to any scientifically-minded person that addiction is a mental health problem. Here In Germany, the vast majority of homeless people are addicts or people with major mental health problems. You have a small minority hiding from the law, and an even smaller portion of healthy people choosing the lifestyle.
Instead of relying on the charity of wealthy people, good public mental healthcare, public addiction centres and social workers engaged with the homeless community are the ways forward.
There's a reason why some people get into debt because of consumption: they don't plan reasonably. What do we do? Do we not pay them UBI but give them pocket money and keep the programs in place to cover their rent etc because they can't be trusted to take care of that with money we give them? Do we just ignore their fate and watch them go hungry and eventually homeless? Do we keep the programs in place, give them UBI and then pay their rent when they spend the UBI but didn't include the rent?
Again, I'm not sure about the situation in the US, but here we have public services that can help people go through debt restructuring or private insolvency in the worst cases, as well as offering classes for money management and centres for addictive behavior. This isn't done purely out of humanitarian concerns either, addiction and lack of education are problems that keep people from being productive citizens - and this is expensive for society at large.
That's not right. We're living in a world like this. When people cite stats that show x% of people living paycheck to paycheck that is almost guaranteed to be due to over-consumption and consumer debt if your household income is above, say, $50-60k/year. At that level, you have over-consume to have nothing left over.
Most of the people struggling are below this figure and not because they spend too much on TVs.
Those probably don't exist with UBI, because one point of UBI is to take all the money going into those support and give it directly to the people and let them take care of themself.
In german there is a significant number of people and families who are only somewhat functional because of those external support. Without this support, they will probably end on even lower levels than now.
When people talk about UBI, they usually forget the healthcare-problems, because that's a big financial burden which will sting the posibility of UBI.
That's true in Canada and United States. The problem is that there are major legal barriers pushed through by activists to prevent forced institutionalization. Apparently it is a fundamental human right to live in a tent city off the freeway without basic sanitation.
That is a quintessential example of "throw baby with bathwater". You've replaced regulated institutions staffed with credentialed professionals (medical and otherwise) providing safe and structured environment and healthcare, with mentally ill people living in tent-cities and squalor, surrounded by crime, prostitution, abuse and illegal drugs and exposed to the elements.
Tell me again how you've guaranteed 'basic human rights' with your replacement for institutional care? And don't tell me that any problems in the 60s and 70s with institutional care, could not and would not have been improved over time. Instead, the policy to dismantle state and municipal institutional care destroyed countless lives that would have benefited from said care.
>The role of any modern society is to offer people who need it treatment and basic support (and that should include housing, of course), without impeding their basic human rights.
And people who aren't capable of making the best decisions for their lives due to mental illness - how does that factor to your equation of 'basic human rights'?
On a side note, have you walked through homeless encampments in cities like San Fran, or Seattle? It is obvious that mental illness and drug addiction is rampant.
However way you slice it, mental illness represents a huge part of the homeless population. Policy wise, they are treated no different than people who end up homeless due to economic circumstances.
35% have a substance abuse problem.
Believing that these populations don't overlap involves some pretty magical thinking. Logically between 40-50% have one or the other problem and 10-20% have both problems.
This doesn't however paint a complete picture because its a chicken and egg situation. Did people end up homeless because they were ill or on drugs or did they end up ill and or on drugs after they were on the street.
Point 2: I'm not convinced that UBI worsens the opportunity for predators, compared to how things stand today. Why would it?
Point 3: I'm not convinced this is likely to be a real problem. Today, different countries have different levels of welfare. I doubt people are less charitable in high-welfare countries (although this is just a guess), and overall, you're certainly better off being down-and-out in a high-welfare country.
Also, I will add that when people on cash assistance in Denmark (kontanthjælp) do stupid things like spend all their money on alcohol, the general response seems not to be an offer of support but a "pull yourself together, you've got the means to do so". It definitely might just be the the circle I'm in, but thought I'd offer up my experience.
I think point 3 will be a real problem with UBI.
The current system results in widespread homelessness, despair and inequality. To say we are going to stick with what we have instead of giving everyone the basics to live a decent life makes no sense. We are sticking with a known flawed system that punishes the poor because a few people may not play by the rules in the new one.
Why would charity drop off, if someone is charitable, now they have more to donate. People are also easier to help because they are starting from a solid base instead of nothing.
As far as being at the mercy of the rich, we are already there. If everyone had an income, they could actually band together if they wanted and use it on projects causes that are important to them instead of just the constant struggle to survive.
It sucks when an addict steals the catalytic converter off your car. They cost a pretty penny to replace! (~$3000) Meanwhile the addict is getting $50, maybe a couple hundred dollars for it? UBI means surviving until the next UBI check (be it monthly or weekly or hourly) allows you to spend it on whatever they need. Be it drugs or alcohol or food.
2. This is no different than now. Endless scams- advertising, etc all the time to extract peoples money. Regardless of source.
3. Duck ups aren't going away. Under UBI they at least won't be at the mercy of beauracy and changing political will re funding social services. And people who want to volunteer to help them will be free to do so not having to spend a 1\3 or more of their waking life just to survive.
UBI won't fix all problems. But its advantages outweigh.
This seems to be a problem because the vouchers are only redeemable by government-granted monopolies, and thus neither tenant nor landlord are participating an open market. If the tenant could go anywhere else with their money a la UBI nobody would choose those terrible living quarters / they would be priced appropriately.
We've been trying these approaches for centuries now, and they always end the same way. There has never been a "free" market which hasn't vastly increased inequality of opportunity across the population as a whole. Why is it so hard for proponents of "free" markets to accept this fact?
UBI simply highlights that money is a proxy for political power, and there's no way - short of violence - that those with limited power can access personal or political leverage in any system which over-rewards concentrations of power.
UBI will improve nothing, and may make some problems much worse. The real solution is improved public education at all levels, limits to advertising that promotes selfish greed and consumption, regulation of the press to eliminate the deliberate dissemination of obvious fake news, good public healthcare, higher taxation for giant monopolies and their owners, improved regulation to end the financialisation of everything, much improved public infrastructure, stronger unionisation and other forms of collaborative politics, and easier and cheaper access to capital for small business of all kinds.
Poor people aren't poor because they consume too much.
>regulation of the press to eliminate the deliberate dissemination of obvious fake news
How do you stop this from being used to mandate the dissemination of fake news?
Sometimes that is the case. I would say that if your household income is above $50k/year and you're living paycheck to paycheck, that results from over-consumption.
Out in the suburbs you could still be paying 18k + all the other expenses.
God forbid if you have student loans or any other big bills.
I will say it again. Poor people aren't poor because they consume too much in the same fashion that people who can't breath don't have copd because they breath too much.
It's OK to say that some areas are not affordable. Manhattan is a great place to live, but it is is not affordable for most people. Don't live in a place where it costs $2k/mo to rent an apartment if you don't have a salary to justify it.
>Poor people aren't poor because they consume too much in the same fashion
You cannot make that kind of universal statement. Sometimes it is an income problem. Sometimes it is a spending problem.
Poverty is also a finicky concept. We immigrated here and lived in the immigrant ghetto for the first 10 years after immigration (mid-80s to mid-90s). We didn't have a lot of stuff, but I never went hungry. Both my parents worked multiple minimum wage (or below) jobs, but there was always dinner, there was always breakfast and lunch for school - even if myself and siblings had to heat it up. Looking back, I would say it we were poor, but really what that means is we didn't have a lot of stuff and all our cloths were from consignment stores. Both my parents were able to scrape enough for a down payment on a house after 10 years of frugal living. They are retiring into a comfortable life now. What happened? My circle of immigrant friends who lived in the same ghetto, from Eastern Europe, Hong Kong, Iran, all came here with similar economic factors, all of them are doing well. How is it impossible in your world-view that an immigrant who comes to this country with no advantages, still manages to build a nice life? And yes, my experience has colored my view on poverty (at least poverty outside of mental illness and drug addiction).
I see your cynical, defeatist posts all over the place - I don't understand how immigrants can build a life, with no communal or familial roots, minimal language skills, while you, being native born having all the advantages complain about being poor and not being able to get a mortgage loan. DO SOMETHING ABOUT IT.
Every era has always had successes and failures and a certain bar between one and the other. The bar is higher now so that the rich can extract more of the value from the system. More yet thus will fall below it that isn't defeatism nor is screaming do better at them a strategy for improvement.
> DO SOMETHING ABOUT IT
Would you like to add #trysomethingnew or #learntocode
I'm 39 year old with lungs that don't work so well anymore with a sick wife, one household income from now until forever, 10s of thousands of dollars of student loan debt, and a level of education best described as "some college" in computer science.
I'm not defeatist or defeated. I have an apartment, health insurance, and I'm planning on getting through covid and keeping my income enough above rising costs to keep having a home and even some small niceties. I'm open to opportunities but I'm not in much of a position to claw my way out of the bottom half if I'm realistic about it. The United States has always had an underclass and they couldn't ALL DO SOMETHING ABOUT IT in any particular era and not because of mental illness or drug addiction.
Why don't you try being a landlord if it so easy? Not only do you have to capitalize to the tune of hundreds of thousands of dollars (or get leveraged to that level), between costs and taxes, your profit rate is going to be pretty tepid. It's not easy money, trust me.
>We've been trying these approaches for centuries now, and they always end the same way. There has never been a "free" market which hasn't vastly increased inequality of opportunity across the population as a whole. Why is it so hard for proponents of "free" markets to accept this fact?
Because that's not true. The free market has been the primary and pretty much the only driver of prosperity. And you cannot legislate prosperity. There is no magic combination of minimum wage, rent control and welfare that will increase jobs, income and wealth of the individuals.
> limits to advertising that promotes selfish greed and consumption, regulation of the press to eliminate the deliberate dissemination of obvious fake news, good public healthcare, higher taxation for giant monopolies and their owners, improved regulation to end the financialisation of everything, much improved public infrastructure, stronger unionisation and other forms of collaborative politics, and easier and cheaper access to capital for small business of all kinds.
Every communist nation thought it could 'educate away' human nature and brainwash to population into good communist automatons, and every time they tried it led to a humanitarian crisis. It's seems to be a core property of communist thought that human nature is completely flexible and can be shaped in anyway to make communism actually possible.
>You can borrow the money for the property and charge more than the mortgage and then outsource the actual day to day collection of rent and finding tenants.
TRY IT and see how the math shakes out for you. I bet all those leveraged landlords are really having a ball with this pandemic. Or how about 10 years earlier when the housing market collapsed and debts were called in. Or tenants that destroy their property requiring thousands in repair. Or delinquent tenants that cannot be evicted for months due to municipal policies. Or property that sits empty because cannot find tenants. There is no free lunch and no easy money.
Your perspective is based on ignorance and a comically naive view of real estate.
They say money doesn't buy happiness but personally, I highly recommend being rich over being poor. If, as a rich person, you chose to invest in real estate (risky, as pointed out why) instead of the stock market (also risky, see Q1 2020 volatility), then sure let's discuss ROI for REIT vs SPY over a 15 year period that includes 2008 and 2020. However, let's not pretend being in the highly privileged position of throwing money you have but don't want to spend at a problem (Eg selling shares of stock, in order to cover the cost to restore property after a bad tenant) is remotely the same thing as being too poor to afford food.
There are risks involved with investing money, but the number of hours it takes to make $50,000/year from a $10,000,000 investment, is approximately 0. For those hustling 60 hour weeks to make $43,440/year, that's obscene.
If you were a landlord and couldn't save enough in the 12 years between 2008 and 2020, to weather a few months of not having the rental income, maybe you should have taken fewer trips to the Caribbean, or Europe. For those that are just getting in during 2020, I'm sorry.
That's not true as a universal. Tenants have flexibility of moving to another locations, moving in with friends or family, or making alternate arrangements. On the other hand, foreclosure and repossession would mean the erasure of a family's life savings.
So yes, it does compare, and in many cases it is worse.
By the way, chronic homelessness is not an economic problem. It is equal parts mental illness/drug addiction and polices pushed by activists to prevent providing institutional care to those individuals. Economic homelessness, on the other hand, though it is terrible and happens, it is a transitional state and existing government welfare programs mitigate.
>If you were a landlord and couldn't save enough in the 12 years between 2008 and 2020 ...
This is obscene statement. You have no qualms creating hypothetical fiction in order to extend irrational levels of empathy towards your fictional situations, but you have zero left towards a real group who could be really struggling. And no, landlords are not your Dickensian style villains. They could be working class people who saved their entire lives to purchase another property, or they may be renting out their own house ... and you look at them with disdain. Ugly, through and through.
In a bad scenario you keep most of your wealth and the home you live in.
Your bad scenario is still literally better than half the nations good scenario.
My govt doesnt restrict people to only rent from certain approved places.
If you have a rental agreement, and abiding by the rental agreement policies, then u can rent from anyone under govt assistance.
I had rented my basement out to a family under rental assistance.
The govt wrote the checks with my name on it that the renter would provide to me.
1. People in the comments below have addressed this. Not really sure how this creates a greater power divide than the current system. Having money allows individuals choices.
2. Again, providing people with money will allow them to have more choices. If housing becomes too expensive in my county, I now have a greater degree of freedom to move and this creates more competition for rental rates.
3. This is one that I feel like most people miss the forest for the tree. You're right, it's going to happen. I just don't think that a portion of bad actors in the system should prevent that massive benefits it can create for the people in society that will spend it in more productive ways. I've heard arguments of how it will create disincentives in society. That people will choose to no longer work. But when I ask the exact same people that pose that question if they would stop working if they had $14,400 provided to them every year, the answer is unequivocally, no. If you're looking for policies that solve all problems, you're not going to find any.
- Give the same amount to everybody* , with no means testing to avoid it become a political football. Bill Gates gets it too. This also removes any dis-incentive to work while also collecting UBI. Otherwise congress with write up a 9000 page law about who gets how much and when, which they then hold everybody hostage to.
- Pay for it with a flat tax on all income from all sources, including capital gains, dividends and carried interest. All the money goes into a separate off-budget pool for immediate monthly distribution. Like SSI, but with no 'investing' in treasuries or anything else. Don't let the politicians get their hands on it. Money comes in and immediately goes out. This makes it self-balancing. As people reduce their work, the pool shrinks, causing some people at the margins to re-enter the workforce. As we become more productive the pool will increase, allowing more people at the margins to reduce work if they want to. The tax rate can be adjusted as necessary as we see how it's working out.
* "Everybody" certainly has nuance to it that has to be defined. Children? Green card holders? Illegal Aliens? Felons? Inmates? Citizens living abroad? This is certainly an important definition, but less important than the overall idea.
They literally survive by using their power to placate whoever they need to, voters in their district broadly or special interests specifically.
They will never not choose to carve out as much benefit for their supporters as possible. Look at every piece of legislation in the past generation. Why would this be any different? Given the vast amount of resources UBI would be directing it is absolutely inevitable.
I just wish we could find a way to give people money with no judgement of any kind, political or otherwise. That's probably asking too much....
There's already a power divide between those who can live off of their assets and those who can't. Those who can't are at the mercy of those with significant assets when it comes to providing themselves with housing, healthcare, food, etc.
> Even with UBI they could still end up hungry or homeless. Will we help them? Or will we say "you had your UBI, the rest is on you". This changes the morals of how we treat people in the worst times.
Look at the standard UBI proposal of $12k a year. That is not even enough to cover health insurance premiums, deductibles and copays for a single person on the individual health insurance market, let alone a family.
If UBI were to replace social programs, people would necessarily have to choose between paying for healthcare, or going without it but being better able to feed and house themselves.
UBI must be a supplemental income on top of programs that address our societal and economic shortcomings.
2. Surely UBI is cash, not vouchers. At which point the particular lower-than-face-value scenario is moot.
3. This is a valid point. I'm not sure whether it's good or bad, but it does seem likely to entail some morality shake-up.
How is this different than welfare, except that with UBI people are able to get a job without fear of losing benefits?
Again, how does UBI makes this problem worse than it already is? I've never heard of _any_ idea which makes this problem disappear.
In my opinion this is actually an argument in favor of UBI, rather than against it. Maybe the charity mindset would change, but I don't see it completely going away. On the other hand, many excuses will. We would benefit from a system that gives people a better chance at demonstrating personal responsibility.
In countries with a tradition to have full government care for all citizens, those cases are solved by having the payments managed for you (usually by the city). So you would have weekly smaller payments rather than a monthly payment, and you may even have the city pay your rent for you rather than giving you cash in hand. And if you still mess up and are in a temporary urgent need for money, you can apply for an additional extraordinary amount to cover your critical expenses.
I'm aware that such a "nanny state" is not attractive to a lot of Americans, however this is an approach that solves most of the potential problems and it also relieves other citizens from being concerned about having to give out charities.
It's not as if the government will rent you a penthouse. If there are no cheap apartments available in a certain place, you just don't get to live there. I've lived in a building with a fair number of government-paid apartments and the people there are very, um, shall we say "poor" in the non-monetary sense (though that too). The rents were low (that's why I was there as a student) and while I'm sure they turned a reasonable profit just like they did from the students renting there, the rents were below those of neighbouring buildings. What's more, in the Netherlands many landlords price their apartments just above the limit for government support so that even if you could easily afford a place €10 cheaper, you now can't because you are losing out on up to 350 euros a month of support. Landlords don't want government-supported renters much of the time. It's not that lucrative.
When everyone has an extra $1000 do you really think landlords won’t increase rent? The price of food and clothing won’t increase? When literally an entire country is richer by this amount?
UBI does not create more wealth. It does not mean all the people receiving it will put more value into the economy. It just means everyone gets X+$1000 more tokens for the same wealth/goods. Poor people will still be in just as difficult a situation as they will be competing for the same goods against the same people as before.
Someone brings this up in literally every UBI discussion ever.
Maybe competition takes care of that? But that doesn't seem to work very well in the current housing market.
Why doesn't every change in income level and distribution just change price levels of goods demanded by different groups resulting in no change in relative buying power? Several reasons:
(1) No one has access to idealized monopoly rents, and
(2) (relative to redistribution) Very few goods are demanded only at one point in the income distribution.
OTOH, basic goods becoming more expensive means producing them becomes more attractive which leads to lower prices or better wages (because less people will be willing to work shit jobs with crap pay like in the meat industry today).
e.g in my city, I am positive the rent is high because of issues with transport i.e. poor transport means you need to live closer to work for a reasonable commute.
Basic rent controls and other affordable housing initiatives are usually advocated by UBI proponents. There's no reason we can't have both.
Discussing the benefit of UBI is wasted time before you fix the market-adjustment problem.
Now everybody is a millionaire. Does this mean that prices will increase? Of course.
But will people be just as poor as before? No! People that were millionaires before are nothing special after this measure. That's what UBI does, it reduces wealth inequality between lower and upper class.
Now this argument does not and will not apply to the billionaire class. For that inequality we need a different solution, starting with unavoidable progressive taxes.
As long as its something like $1000, my argument still applies. Are you saying you'd like to see a UBI of $1m?
Everyone gets X+1000 instead of X. That means if X used to be 1000, you now get double your income. If X used to be 100000, basically nothing changes for you. Perhaps double the income does not mean double the purchasing power because of the effects you stated, but there is no doubt your purchasing power will increase.
Rents will go up, that is very likely. However, it is extremely unlikely the rents will go up by $UBI everywhere. Most other products will remain unaffected. That means that if your rent goes up by $UBI/2, your purchasing power has still increased by 1.5X. This is a gigantic increase for poor people that live paycheck to paycheck.
> there is no doubt your purchasing power will increase
Why is there no doubt? Just because you having more money, you must have more PP? But if everyone* gets more money, it might not.
What you are doing is devaluing currency. Everyone invested in currency loses as their investment loses value. The rich have more "money" so it might seem this proportionally penalises the rich, but it doesn't - a person whose large wealth is invested in things that aren't dollars doesn't really lose a lot, the dollar-amount value of their investments just increases, which cancels out the effect of a lower-value dollar.
This is a rather nop argument that can be made against any and all taxation. Giving everything to the rich and leaving the poor to starve has rarely worked out well either. It tends to lead to rather violent uprisings and riots. Those also tend to make countries less attractive places to live.
> Why is there no doubt? Just because you having more money, you must have more PP? But if everyone* gets more money, it might not.
My post was stating this from the perspective of poor people. UBI equalises purchasing power. If the amount of products produced remains the same, adding a constant amount of money to everyone's income will increase the purchasing power of the people in the bottom, and decrease it for those in the top.
It is obvious in extreme examples: if Bob makes 1000 per month, and Alice makes 99.000 per month, then Bob has 1% of the total PP, and Alice has 99%. If we then add 1 billion to both of their incomes, both Alice and Bob now have roughly 50% of the total purchasing power.
Only if you assume the wealthy have zero resistance to moving, and would leave for a country with lower taxes at any level of taxation. You're essentially saying nothing can be described as expensive without the same complaint being valid against anything not free.
> It is obvious in extreme examples
That extreme example only applies it to 2 people. Applied to all Americans, and the dollar becomes worth less.
Your PP equalisation has the exact same effect of heavy taxation, although it feels more like revolutionary redistribution. Whatever you feel about that, it's still short of redistributing PP because it only applies to currency, and not other investments.
Not taxing the rich does not equate to "giving everything to the rich and leaving the poor to starve".
Almost all the decline in poverty over the last 30 years was due to economic development which, according to economists who study development, was massively facilitated by the spread of market institutions like property rights
The solution to poverty isn't for government to take money from the productive and give it to the poor. The actual solution is to increase employment options and the earning power of the poor. Socialist ideologues need to look at the empirical evidence, and the economic literature, and learn that the welfare state works against the solution to poverty. The profit-motivated investment that emerges when people's right to their private property is protected, is the solution to poverty.
This isn't correct. The figures are not founded in reality.
“Over the past decade, the UN, world leaders and pundits have promoted a self-congratulatory message of impending victory over poverty, but almost all of these accounts rely on the World Bank’s international poverty line, which is utterly unfit for the purpose of tracking such progress,”
Unsurprisingly,  and  of your links uses the above mentioned poverty line by the World Bank.  seems to be some kind of a opinion piece?
I don't have time to look at this link right now, but it's a broad set of metrics that have dramatically improved over the last 30 years, including nutrition, infant mortality, wages, percentage of people with running water, percentage of people with permanent dwellings, etc.
This rejection of the established Economics is no less superstitious/anti-scientific than the rejection of the established findings of epidemiologists on the efficacy of vaccine. It has the same layman's fallacies, and conspiracy theories about the scientific discipline bringing out these findings.
Anti-scientific conspiracy theorist?
Alston's statement doesn't provide any substantive criticism of the statistics. He points out that the cutoff for extreme poverty used by the UN is extremely low, as if that is in itself a moral failing.
The point of any poverty line is to measure progress, not to imply that the line is a sufficient standard of living.
Alston also points out that the number living with a wage below $5.50 a day has declined very little since 1990, which omits how much smaller this cohort's share of the global population is today than it was in 1990, due to population growth that has occurred since then.
- People at low average income will have more money (the UBI-increase will be higher than the tax-increase)
- Average income: You get as much as before.
- Higher income: you pay more in taxes than you get from UBI.
Basically it ends up being a way to move money from the ones with higher incomes to the ones with less. It will ofc still give some inflation as poor people have more funds for basic needs. But other people will have less - and the average person just as much as before. Limiting the effect of the inflation.
- Low income housing costs will probably inflate because all poor people will have an extra $1000 to spend.
- Avocado costs probably won't rise, as middle classes will have the same spending power
- Bentley and yacht prices might decrease as the rich have less spending power.
So you haven't helped the poor. You've created the usual issue with socialism/communism that in the end all it does is pull everyone down, rather than lift anyone up.
If that's your goal, fine, admit that you hate the rich. But the marketing promises of UBI are not that, they are about helping the poor.
My own opinion is that I don't know the correct way to do economics in the future. But I do think that we at some point should think very different. I don't think the current system works out for most people in the future. And UBI looks more like a band-aid than an actual fix.
No, this is something someone raises in literally every conversation, without any support.
> The very things poorer people would buy from it would get more expensive by the UBI proportion,
The argument you are making is that redistribution regardless of magnitude cannot affect buying power, even if the after-redistribution distribution is perfectly flat, people (at least those coming up from below) will retain exactly their pre-redistribution buying power.
> UBI does not create more wealth
Not as a first-order effect, no; it's first-order effect is redistribution.
> It just means everyone gets X+$1000 more tokens for the same wealth/goods.
Only if it is fully monetized, which doesn't seem to be anybody’s plan. If any of it is financed by traditional fiscal means (taxes and/or debt) it's redistribution, not flat addition.
This means that the amount of money overall does not increase as much as the amount of money poor people have.
Therefore, even if there will be a bit of inflation, it won’t cancel the effect of UBI.
Those who earn a lot will have less than before (Because of inflation), but those who earn little or nothing will have more.
Just because average inflation is the same, doesn't mean every product's inflation is the same.
You will see much larger inflation in goods everyone needs, especially low income housing, and maybe some deflation in luxury goods.
On average theres maybe no inflation, but you haven't actually helped the poor. Well done.
And on the subject of low income housing, it's often highly regulated, and can't be hiked arbitrarily.
If I've understood correctly, your argument is that the inflation in the basket of goods consumed by low income people exactly cancels out the increased purchasing power, I'm not sure you can argue that's definitely the case.
Whereas for your argument, I’m not sure how you come to the conclusion that inflation will cancel out all benefits. There is no reason to assume that.
Maybe UBI is financed through massive deficit spending, leading to inflation, and rents increase.
Maybe UBI is financed through broad-based tax increases that offset the increased income, leading to nothing in particular.
Maybe UBI is financed through increased taxes on rich hedge fund managers, who all quit their high-paying finance jobs to pursue their low-paying art passions, and rents decrease.
Any of these are plausible. UBI is a political topic, and how it is financed is crucial to understanding its impact.
It will help the working poor a lot, but any market where there's real competition, that competition will continue to keep prices low. If prices go up anywhere, that's a sign that in that market, there's no real competition.
Or it could be that wages go up due to basic income, in which case costs and prices will indeed go up, but then there will be a good reason for it.
You can't eliminate the welfare bureaucracy with UBI because:
- You won't want to be giving free money to literally everyone, only people within your jurisdiction. So you still need to figure out who those people are and whether they're authorised to receive UBI.
- It will act as even more of a magnet for illegal immigration, so you'd still need to spend on border reinforcements. Same problem as they have now in Germany and Sweden: lots of people turned up who can't work and sit on welfare forever. If you don't stop this it's in reality a policy of giving out enough free money to live by western standards to the entire world, which isn't how it's being advertised.
- You still need to deduplicate everyone and ensure people can't register for UBI over and over.
- You need to stop people creating fake identities to receive UBI for people who don't exist.
- You still need to ensure UBI stops being paid when someone dies, even though families and friends have strong incentives to stop the state finding out about a death.
- You still need to decide how much the UBI is, how much it should change, and whether the amount should vary by location. What's plenty for someone in the countryside may be considered insufficient in the city.
- You still need to track where people live, the moment you give way on the amount being adjusted regionally, which you will because the sort of people who most enthusiastically support UBI are all-in on the type of "fairness" that invariably means not treating people the same. Or are they going to advocate for a single income tax rate across all earning bands as well?
- You will need a huge rise in taxes to pay for this, meaning tax evasion and avoidance will also go up quite dramatically. You'll need to bulk up the tax bureaucracies to handle this.
UBI is just a modern rebranding of what in the 20th century was called the socialist utopia. People tried it, it doesn't work. That was Russia at the start of the 1900s. UBI advocates today seem to have forgotten about all that, but they're re-treading intellectually dead ground.
You need to figure out who they are to be able to give them money in the first place. That's not the thing you're saving on, but all the other checks to see if you're justifiably unemployed/disabled enough to be receiving this money.
A big problem with the welfare system is that people only get it when they don't work. They lose it when they get a job, which can often mean they actually lose purchasing power, so they're effectively being punished for working. UBI creates a system where you always get ahead by working, even if it's only a little bit.
Of course you still need the basic civil bureaucracy; every country needs that. But you don't need an extra layer of bureaucracy on top of that.
I've argued above that in fact you will still need a complex welfare bureaucracy that looks very similar to the one we have today, given even basic constraints like "there should not be excessive levels of fraud". Deciding if people have a job or not is a trivial cost compared to the entry-level costs of just making sure you're paying people who exist and you only pay them once.
Again - does anyone have a rigorous, convincing analysis of the cost of means testing specifically? Perhaps I'm wrong, but I don't think so. Especially because people who argue for UBI do not argue for the abolition of things like disability benefits, government subsidised health insurance and various other means-tested subsidies.
> "you will still need a complex welfare bureaucracy that looks very similar to the one we have today, given even basic constraints like "there should not be excessive levels of fraud". Deciding if people have a job or not is a trivial cost compared to the entry-level costs of just making sure you're paying people who exist and you only pay them once."
I strongly disagree. For one, there's a lot less room for fraud if it's something that everybody gets. Secondly, the government already needs to know that people exist. People get born, they go to school, they pay taxes, they vote, they die.
> "Especially because people who argue for UBI do not argue for the abolition of things like disability benefits, government subsidised health insurance and various other means-tested subsidies."
I would prefer those not to be means-tested, but equal for everybody. If you're disabled, you get disability benefits on top of your basic income, and you get to keep them even if you do manage to get a job despite your disability. Similarly, I'd like to see health insurance as part of that basic income.
The only place to test people's income would be for paying taxes. Basic income takes care of everything else. (I suspect even progressive taxation might be replaced with a single flat tax rate in the basic income is high enough.)
What about income tax? Shall we set a single income tax band for everyone? You say no but where's the consistency? Means testing is good when taking money but bad when giving it? Why?
The logic of a strictly egalitarian universal welfare system would also suggest governments be strictly egalitarian in all ways, meaning all taxes would be poll taxes. Everyone treated the same. But nobody is arguing for that, which makes it look like they're not working from a general principle of lower bureaucracy and more equality, just a general love of welfare.
I think I already addressed all of this in the comment you're responding to: if UBI is high enough, I think there could indeed be a single tax rate for everybody. Because the UBI would already provide a comfortable living income, and only income for luxuries would be taxed.
But I think UBI will start lower than that, which means that at first, progressive taxation will still be necessary to some extent.
So we can add to the list of welfare bureaucracy that'd still be needed, disability tests. That's where a big part of the fraud comes from in any welfare system, because fraudulently obtained disability benefits is effectively a form of UBI: for those who have it, it never ends even if they get a job, unless the job is one that their pretend disability would prevent them from doing. Very attractive. Also, doctors and assessors don't pay for it so they tend to be willing to grant it to people in very lax ways.
This can be seen in the way people on disability benefits rises and falls with the economy in the USA.
As for a "comfortable income", again, you're dreaming. For everyone to have a comfortable income without having to work, with extra income only for "luxuries", isn't physically possible. It's literally the original communist vision that was abandoned because it didn't work. Comfortable income was simply redefined back then as subsistence income in a broken economy, and luxury was not only reserved for Party members but redefined as a standard of living lower than that available to ordinary people in the supposedly deeply unequal west. UBI is just centuries old political ideas re-heated and re-branded.
We don't actually need a rigorous analysis of the costs of means testing to conclude that arguments that extending a benefit from <10% of the relevant population cohort (e.g. an unemployment benefit with eligibility testing) to 100% of it (i.e. all working age population) will cost more than the testing, unless governments spend 90%+ of the relevant component of their welfare budget on admin rather than payouts. Common sense as well as the published statistics confirms they generally don't.
If UBI was financed through taxes, UBI would not have the inflationary effects that you describe.
IMO the only viable responses are either rent control, or more elegantly, high availability of public housing at fair rents mixed with private units so as to not create class segregation.
Slum properties in richer areas might see it however perhaps those people living on the breadline in a rich city would take their BI and migrate away.
UBI does not create more wealth.
Nor do pensions for the elderly yet we still pay them.
UBI doesn't directly create more wealth, but it would spur demand for creation of more actual goods. After all, poorer people tend to spend much more of their income than wealthier people. And once that is done, society will in fact be wealthier in a concrete sense.
I still think some form of UBI is worth considering, especially to remove bullshit jobs and help the poorer to come by, but should be complemented from other more positive initiatives (free tuition, free healthcare, free transit) and it will be extremely important to pin down where the money for it exactly comes from, as putting the burden primarily on the middle class would do more damage than not on the economy.
Before even going there the key is to ask where this money comes from.
Handing any significant amount of money on a recurring basis to everyone is tremendously expensive.
Without considering inflation the first issue that comes to mind is that people will use the extra money to pay the extra tax needed to give them extra money....
2. The primary predator are relatives and common thugs usually wrapped up into a gang environment.
3. We cannot always protect people from being stupid. The idea we can is a no win situation. All you can do is try.
America can handle a UBI but the two political parties cannot. To them it will be a means of control and a weapon. Unless #1 is solved, where the government buries people under fees, penalties, and taxes, UBI will only become a transfer of money from the right hand of government to the left hand.
UBI will require rewriting the whole structure of how the government collects money. UBI must include providing all services for individuals for free or heavily discounted.
Suppliers always price their goods as high as they can for the specific values of supply, demand and competition, and none of those things will change. The customers will just have more money to pay for the right to live under a roof.
If enough houses can be built, and basic income is high enough to pay free market prices, then any landlord who asks too high a price, will price themselves out of the market because there will be other cheaper houses. But for this it's vital that the supply of houses is unrestricted.
Of course a landlord might bait and switch with low rent as you move in, and rapidly increasing rent once you get settled. That's simply something that needs to be banned. After you've moved in, landlords should only be allowed to increase rent by either inflation, or the average increase in new rent in the area. But preferably just inflation.
I think you should just raise cost of owning additional houses so keeping them empty really hurts.
Rent control seems like government micromanagement that we want to avoid with BI.
My point is: there needs to be competition on the supply side in the housing market, to keep prices somewhat related to the real cost of the house. If this isn't possible, the government needs to step in. I hope to avoid that where possible, though it's certainly necessary to prevent landlords from raising the rent on people after they settled in a home.
Are we not talking about modern society though?
And also, you CAN build new houses in lots of places that are not the current "city centers".
Maybe higher property tax would work then? You need more revenue for UBI anyway.
Renting property definitely should be treated as a business, done by companies, and heavily controlled by regulation to favour the tenants. This is how it's done in Berlin, and it works really well.
Treating property as an investment vehicle is actively harming society.
That is banned. I don't know the limit but it's similar to what you describe. Landlords aren't allowed to raise prices by much per year. It still adds up, but by then you know to look for another place and have a year or two to do it.
UBI becomes the single biggest election issue. Politicians promising increases to get elected, and all the bad policy that stems from such motivations. This is then followed by an inevitable pullback at some point in the future, causing immense harm to everyone relying on every cent of their UBI (most people).
I'm still unsure about UBI, but isn't this already a problem with taxes today? Politicians promise lower taxes.
UBI is one of those ideas that is theoretically awesome but doesn't survive contact with reality, or rather the inevitable flawed humans that administer it.
You don't know that - you just base it on your theory.
Of course, every idea gets perverted by current political system, but the problem is often not the idea itself.
Huge appeal of UBI is that it's simple hence easier to control. Taxes were supposed to be simple too and yet they got overcomplected to serve the special interests.
The danger of abusing UBI for political gains is as real as it happened with taxes, but it doesn't mean the idea is inherently bad - we just have an inefficient and harmful government system and fixing it should be a priority if we want anything nice like properly implemented UBI. Another Yang's idea, Ranked Choice Voting could at least mitigate some of the issues like political bipolarity.
I have yet to see a government institution remain uncorrupted and focused on the original principles upon which it was founded. That has little to do with politics as every party comes up with some bad ideas once they find themselves with power. This is at least partially due to the fact that every party is under constant pressure to 'do something' even if doing absolutely nothing (or at least nothing visible) is the right choice.
I have a very hard time conceiving of long-term solutions to such large problems that don't basically boil down to 'if the government is in charge of it, it will end poorly'
If every unscrupulous politician can promise to raise the base UBI rate to get elected, what stops that?
Obviously, inflation will fix it in the relatively short term, but that's not a good result. And there's an unscrupulous politician in power.
If every unscrupulous politician can promise to lower taxes to get elected, what stops that?
“When the people find that they can vote themselves money that will herald the end of the republic.”
So basically, any nation that increasingly votes itself more money stops being a nation pretty soon
In the end, it probably doesn't have to be perfect, just better than status quo.
The third is a potential issue, but the question is whether it will be an improvement over what happens now; i.e. many don’t get the chance to administer their own funds or even have them administered on their behalf, we just skip straight to “it’s all on you”. A credible UBI would likely require a massive expansion of redistribution, because we spend so little on poverty relief today. True poverty relief would require giving people a lot of money, and that is by definition very expensive.
The fundamental issue I see with UBI in 2020 is that it must ultimately be paid for with massive productivity gains (in the face of many hard structural challenges), with no real evidence of where they will come from.
Elsewhere, neoliberal UBI would definitely cut into these systems.
The solution to this is easy... Low friction bankruptcy. If your UBI is paid daily, and one day you mess up and gamble it all away and get big debts, that should not stop you spending tomorrow's UBI on food.
Today, debts chase people for years or decades, and keep the poor poor. The fix is to let bankruptcy be something you can sign up for online in an hour. Then, if a debt shows up, you simply show them the bankruptcy certificate and walk away. The creditor then has to do all the work of finding any assets you owned at the moment you got the bankruptcy certificate and using them to pay off any debts.
I feel the opposite is more likely to be true.
An scenario of populist leaders capturing UBI individuals and controlling centralized UBI distribution, promising them benefits and at same time menacing them of cuts, and in the meantime dividing the non-UBI crowd with single issues like abortion.
Non-UBI people at the mercy of UBI people is the real danger.
3. I could see part of this as a good outcome. Charity is too many times a fraud. And people would not have any excuse to have their children begging on the streets.
Instead of basing it on bad armchair psych how about provide a credible analysis from an actual economist that shows the conclusions you are suggesting.
Even taxing the richest households and extra 5% would only give the poorest households an approximate extra $1000 per year. This isn't life changing and isn't even much of a supplement. This is a very non trivial problem to solve. We need a much larger source of money.
This is why it should be a regular and frequent income, rather than giving people a lifetime's worth of money when they turn 18. As it is a regular income that resets every week/month/whatever, it's harder to mess up to that extent. Addiction or unwise Hire Purchase agreements might do it, but with the latter, lenders are likely to be even more aware of affordability than they currently are.
That aside, I would imagine that UBI could make people more charitable towards those who are thoroughly down on their luck. Partly because if someone is destitute under that system, something must be really wrong in their lives.
One problem with poverty at the moment is that it is so big. When problems are really big (see also climate change), people feel that effects of their own efforts would be trivial, and so are dissuaded from doing anything at all. If fewer people would be made destitute by bad decisions made out of desperation, donors might feel they can actually do something about it.
Another problem with poverty now is that there are so many diverse causes that it is much easier to aim relief efforts at the symptoms - e.g. shelters for the homeless, food for the hungry etc. If UBI covers that for most people, then we can put more effort into fixing the causes - abuse/addiction/mental illness/predatory lenders/discrimination etc. Thereby removing the need for charity.
Young men and women are coming out of school without the basic knowledge of how to set basic budgets and balance checkbooks. How to understand interest and how that will effect their payments in the future. Understanding that principal comes out last unless you make extra payments, so that it behooves a person to spend a little less on amenities and pay down the principal now .... things like this don't seem to be offered in basic education. Not to mention basic life skill classes, as well (again, these also weren't offered when I was in school either). School seems to be ONLY college prep but, even then, not very well suited for the skills one needs to transition to living a life there.
Anyway, like I said... Tangential conversation. But, basic home econ would seem to address to a degree, points 2 and 3 if UBI were offered. Though, I will admit, I am a major proponent of "education will set you free".
Another thing happening in US is the unemployment program and the Coronavirus relief program which pays unemployed extra $600/week on top of unemployment. This way they make more money than they used to when they were working. In this case their incentive is to just stay home and not work which is also not right as without essential workers in the service industry we cannot get work done and if we start paying them higher than they get with the extra $600 we won't be able to afford them to be hired full time or temporary basis. For example someone even earning the lowest minimum wage can make $800/week and that is about $42,000 annually so we sort of do have UBI currently happening and worth learning from that.
Maybe add more restrictions to gambling (and reclassify things like trading/investing as partially gambling), and keep policing drugs as usual.
Also, mandatory warning attention-abusive mediums, such as casinos and mobile apps; and stricter regulation against misleading advertisement. And greater scrutiny of lobbying..
The problems exist now. How does more income make poor people more at the mercy of wealthier people? How does more income make poor people more susceptible to predators and scams?
UBI helps mitigate these problems, it doesn't create or make them worse. Even charity... I expect some people will increase their donations, because the UBI is free money and they don't necessarily need it.
Inflation is the pressure release valve that allows quietly cutting real costs. Every employer, business, government relies on this. It's why the Fed targets low but positive inflation.
> 1. Power Divide - society will be easily divided into two groups: those who depend on the UBI to live and those who don't. The former will be absolutely at the mercy of the latter. We can see this a little bit with the coronavirus relief packages.
The world is already divided like this.
A book to read, though older, is Tyranny of Kindness and it expands on the plight in vivid detail of our current system.
The article is an anecdote, but it tells the narrative of how the current setup is pretty difficult for people, particularly single mothers with children. They are already at the mercy of people and find no help for charity. In the article, it even mentions how the family that gets supported moves out of their subsidized apartment. It also mentions how brutal the current system is in terms of cutting off benefits.
It actually puts a lot of power in the hands of government and central banks.
So could you with your salary (assuming that’s how you get money). It stands to reason your employer shouldn’t be trusting you with that money they give you.
The main point is that it makes people dependent of the State if they entirely live on the UBI, which is a pretty poor behavior to encourage - the larger the UBI-reliant population becomes, the more they will extract value from non-UBI reliant people through elections and majority.
I'm not advocating for no state at all. But there's a difference between a state that protects your rights and defends your country and one that provides everything for all. That's not at all the same level of dependency we are talking about.
If UBI is pasted in without cleaning out the existing cruft then it'll just be another mess on the pile.
However if done correctly, and not as a form of welfare, then it will be a vast improvement (in terms of fairness) with no effect on inflation.
If UBI ever becomes a thing, I hope that also means that people are on their own if they overspend it.
Still, I hear UBI proponents say that you have to allow loan payments, because otherwise it's not fungible basic income. I disagree and think BI doesn't need financial engineering on top.
Once there is more money in the system (that before the UBI just wasnt there) the prices of basic things might rise and at the end the money you get from UBI will be a "new zero".
I am not saying that this will happen but I think this is serious concern.
Source: former deficit hawk convinced hyper-inflation was just around the corner for half a decade.
Inflation happens when lots of money chases too few goods or workers. We see it in housing, stocks, perhaps also education and healthcare. The money does go somewhere but not to where it is most effective. Why is there no inflation in salaries? Because of underemployment. Companies can always fill their open positions and pick among the cheapest applicants. Why is there no inflation in other consumer goods? Production is happening primarily in developing countries with an even larger surplus of labor.
The answer is probably a little boring and obvious. Give money to people that will spend it immediately, rather than to people who will try to convert it into inflation proof assets. The coronavirus related economic stimulus packages are pretty much the only policies that even attempt to do this.
If they overdo it can easily result in hyperinflation but I think inflation is overdue.
Why? What would be the reasoning?
Re: 2 - Yup, people will have to learn to develop trusted networks and oversight to enforce and prevent, limit that behaviour. That's an organizational related problem.
Re: 3 - UBI on its own vacuum doesn't really work, it's why you also need social services, at least basic health care covered, etc - including rehabilitation programs to funnel people through.
The time will come so even Google-like companies will be taxed to the wazoo
Wow ... a comment about UBI I typed out on my phone now has 600+ replies. I sort of regret posting this since I assume others have much more insightful things to say than I do!
Many great points were made in the replies so I want to be clear about something: I do believe that UBI would be better than what we have now. However I don't think that's the appropriate standard of judgement. To move forward with what would be the biggest government program ever (in terms of cost) we can't only look for marginal improvement. We need to be sure it will be a radical improvement.
Free-market capitalism has mostly failed the lower and middle class of America. UBI gives money to everyone and lets this same market system sort out the rest. I don't have faith in that system to do much besides find new ways to crush those who are currently suffering.
4. Funding - How are you going to fund UBI today? How are you going to fund UBI through a global recession, war or global pandemic? Given the hard choice of continuing to pay UBI or keeping a key economic contributor from collapsing, which will you pick?
What will you do if people generally take the option to not work? In the UK, I believe we now have some fifth generation families that have never worked a day in their lives, and it's not clear how to motivate them to work with the safety net providing enough money for the small number of luxury items they enjoy.
5. Protection - Social wealth-fare systems need to be protected from outside influences. It's not feasible to import all the poor people from across the globe and pay them all a decent living allowance, the economy simply cannot support it. This will in turn have some knock-on effect for immigration policies.
6. Acceptance - When social systems such as the NHS (socialist healthcare) and a form of basic income (for those not working) were introduced in the UK, people were ashamed to use them. Gradually attitudes towards these systems changed, from shame, to general acceptance to expecting. Where people originally begrudgingly took money from the government to see them through hard times, but now consider it as a viable income to replace working. I would imagine the same to be true of UBI. As social attitudes towards UBI relax, I would expect to see unemployment increase.
7. Tax - You're going to fund this through taxes, which will mean increasing taxes on the rich. This will provide a higher incentive for them to avoid paying taxes. The result of implementing UBI could be to drive your 1% away. Also, as with the current tax-brackets (taxes based on incomes), people are dis-incentivized to work towards a promotion as the work-load increase doesn't increase linearly with income after tax.
I think Europe will have to think very hard about some of these questions, I would consider the coronavirus to have provided an unintentional opportunity to observe how such a situation may unfold.
Sadly, this will be important for selling UBI to moderates and conservatives. We have to be prepared for UBI to set us back in a big way when it comes to behaving compassionately towards people who can't solve their own problems. I still see it as a positive idea overall, though. Two steps forward, one step back.
Where I live, if the introduction of a UBI was followed by a drastic reduction (or complete elimination) of the means-tested system we know today, hunger would potentially become a problem for people blowing their money early in the month (or getting robbed?).
This tells me the utopian ideas of replacing the entire complex system with a simple UBI isn't feasible. You'll end up in dreadful ethical choices and moral hazard. This is indeed already happening, but the bureaucracy of it makes abuse less attractive.
As I understand it, that elimination is part of the point of UBI. The MTBs are no longer needed.
Why do you think hunger would be caused by UBI? At worst, I would expects those who already depend on MTBs would be in the same position they are in today.
If that happened regularly the charities would be started up again, except next time far more people would have a little extra money to give so they could be much better funded.
How is the likelihood of this connected to the source of their money? Is hunger not a problem for people who work for a living and blow their money early in the month (or get robbed?)
If you mean this...
"Instead of continually trying to optimize supply, with diminishing returns, we need to optimize demand by giving consumers more money to spend on things they desire."
...then unfortunately it has a critical flaw: redistribution does not create wealth. If the problem is that growth is stagnating, you can't fix it by redistribution. You can only fix it by increasing wealth creation.
That's not to say that there might not be a decent argument in favor of UBI helping to increase wealth creation, by enabling more people to pursue innovations because they don't have to spend as much time and effort on basic subsi