Yes, of course giving people money makes their lives better. It especially works when a very small subset of the population receives such treatment, such that their relative income is higher than those outside the experiment.
The issue with UBI is that enacting it at scale has two huge problems:
1. Financing it. These programs are monumentally expensive. You need to get the money from somewhere. The easiest place to take it is via the money printer and the second is from the rich.
If you do it via the money printer, it's a self-own in terms of inflationary impact.
If you do it by taxing the rich, you wind up hobbling and punishing your most productive citizens. Look at China's economic situation right now to see how ultimately unproductive that can be.
2. Diminishing effects. A bit more money is great when everybody else in your local economy didn't get it. But when everybody gets it, things just become more expensive.
The USA did this during the COVID era. We basically implemented UBI. We expanded the M1 money supply from $4T to $18T and largely handed it out in a diffuse way. For the first 6 months it was awesome. And then shortages started spiking and inflation started creeping in. We ultimately had to roll it back.
I don't think these problems are fundamentally solvable.
Instead, we should foster competition, incentivize innovation, and let markets do their thing. This will create lower prices for basic goods and create employment opportunities so people can have what they need for cheap, under the financing of their own effort.
> If you do it by taxing the rich, you wind up hobbling and punishing your most productive citizens
We may have different definitions of "rich" here. I don't think you can call them the most productive citizens. I think most extractive would be the more accurate label.
And the stimulus checks were short lived, not universally distributed, and came in under $1T. The majority of the money spent was on other sources, even if you want to include the boosts to unemployment in the "UBI" category. As others mentioned it's also conflated with other factors like supply chain failures and massive business loan fraud.
> Financing it. These programs are monumentally expensive. You need to get the money from somewhere. The easiest place to take it is via the money printer and the second is from the rich.
This is not actually that hard because they're only expensive on paper.
Right now you have a slew of means tested programs with phase outs that amount to high marginal tax rates on the poor. Meanwhile we try to do the opposite with the tax system and have higher marginal rates on the rich. These largely cancel out, if not impose higher marginal rates on the poor than the rich.
With a UBI you can use a flat tax system because the UBI rather than the tax system is what makes it progressive, which has the added benefit of simplifying the tax system. Then everyone is paying the same tax rate, which puts a higher "tax rate" on low and middle income people but only on paper, because you've eliminated the benefits phase outs and they get to keep the UBI, which more than offsets it.
The result is that you have a small tax increase on the rich and a small increase in transfer payments to the poor/middle class, but the main benefit is the dramatic increase in simplicity and the reduction in bureaucracy and administrative overhead for administering all of the separate programs it would replace.
> Diminishing effects. A bit more money is great when everybody else in your local economy didn't get it. But when everybody gets it, things just become more expensive.
Except that the average person doesn't actually have any more money, since it's all transfer payments. Someone making $30,000 got some additional money but someone making $70,000, even though they do receive the UBI, has still received less money than they paid in tax to fund it.
And this is what already happens, but much less efficiently, through various existing means-tested programs that would no longer be needed.
What you're saying might be true. My sense is that the political project of doing a full-on tax-and-entitlement reform that results in a more sane system is impossible in the US.
At the ideological/theoretical level, I absolutely believe that there exists a radically more optimal way distribute the existing tax burden and funds.
But at the practical level, I think we have to do the equivalent of a long-term refactor. Any changes we make must be within the existing system and make sense on their own. Our only real option is to steer our way, digestible diff-by-digestible diff, to a better future.
Don't start off with a $12,000/year UBI, eliminate SNAP and instead give everyone a tax credit in the same amount. Adjust the tax brackets to make the math work out. Then do the same thing with housing subsidies, and Medicaid, until all the largest programs are gone. At which point you can see the results and start asking why we shouldn't just do everything that's still left at once.
Maybe you could help me with this because I never understood it. It seems like the tiered rates of our tax is the least of our worries.
I can see an argument that mathematically it's more complicated than flat, but it's just arithmetic. And practically speaking, nobody does it anyway. The computer figures it out, or they look in the tax table. And that's the same thing they're going to be doing if we have a flat tax, right?
You mentioned the additional complexities of the tax code, which I agree are titanic, but doing away with those doesn't mean we need to do away with tiered tax rates.
I guess in my mind, flat tax isn't really much of a gain. And we have to be extra careful to not make it regressive (with something like, as you suggest, UBI.)
> I can see an argument that mathematically it's more complicated than flat, but it's just arithmetic.
No, it's more complicated because then you need to keep track of things at all.
Suppose you go to your job and make a salary and they withhold some of it for the IRS. Then you take a side gig and make a little extra money, or you owned some stock and got a dividend, or anything else that changes your taxable income. Now you have to file taxes to reconcile all of this and determine what your tax rate even is.
If there was a single rate then your employer takes out that much and gives it to the IRS and your side gig takes out the same percent and gives it to the IRS and your brokerage takes out the same percent and gives it to the IRS and you don't even have a tax return because there is nothing to calculate. Or you can just use VAT and not even have to do withholding.
One of the other big things to keep in mind here is that a lot of the conventional wisdom on taxes is PR from rich people/corporations, e.g. claiming that consumption taxes don't tax the rich because they don't spend most of their income. It sounds plausible until you realize that what the super rich and international corporations actually do is keep their money offshore so they don't have to pay income tax on the interest until they repatriate it, which they then never do and instead take out a loan when they want to buy something. So it's actually the income tax they don't pay and a consumption tax they would have to whenever they buy things.
> doing away with those doesn't mean we need to do away with tiered tax rates.
Tiered tax rates are a hideous hack to begin with to avoid people having to do calculus. What you really want is a continuous curve where effective tax rate starts off negative and increases up to some maximum rate with increasing income or spending. Which is exactly what you get with a flat tax + UBI.
1. It's important to remember that having struggling poor people is expensive for the system. Emergency shelters, health issues that go untreated until they need emergency intervention, desperation crimes like theft (affecting policing and prisons), foster care, drug use intervention. These are all expenses that are reduced by a system like UBI. If you keep people healthy and fed, you can keep them peaceful and working and the program pays for itself.
2. I don't see the inflation effect as purely linear. Having $10 when things cost $10 is better than having $0 when things cost $5. There are thresholds that affect peoples ability to even engage with the market that you put your trust into. Also the market wants people to buy things, so it should welcome more people participating in it. And lets not forget that most of the price gouging over the past few years went straight to shareholder profits instead of increased supply costs, we can try to decentivize systems like that that profit off of economic crises.
> we should foster competition, incentivize innovation, and let markets do their thing
"letting markets do their thing" is contradictory to "fostering competition". Markets fundamentally drift towards consolidation. Source: the past sixty years. Markets do not fundamentally organically move towards progress. Often times the profitable thing is to pay workers shit wages and raise prices, and if you try to wait it out for a magical class of well financed competitors to come along and disrupt that status quo, millions of people will have been put into poverty in the interim.
Sixty years is perhaps too long, neoliberalism really kicked off in the 80s/90s with an increase in globalisation, and corporate consolidation through M&As ramped up quickly in the 2000s after financialisation of the economy went in high gear. If we backtrack to the last thirty to forty years and check which top 20 companies got to that spot through M&As it might paint a different picture.
Again, Exxon Mobil is the only overlap with 2020's list. (I presume that the references to "Exxon Mobil" in the 1990 and 1960 lists actually refer to pre-merger Exxon, since Mobil by itself is also on both lists).
I checked, and of the 2020 list, only AT&T, McKesson, and Exxon even existed in 1960 (Berkshire Hathaway kinda did, but they made shirts. Warren Buffet didn't come along and turn it into an investment operation until 1965.
While I agree with many of your points, I feel like blaming item shortages on COVID payments is ignoring the massive impacts that panic buying and shutting down ports and factories had on the situation. Yes there was more money floating around, but people were purchasing items like it was the end of days and we had factories worldwide shuttering randomly due to COVID outbreaks and various government mandates which threw supply chains out of wack.
You're right, the problem in the US was multi-causal. I mention that case because it is probably the best large-scale deployment of a UBI-like program any country has ever done.
While we can't completely untangle the exact contribution magnitude, I think we can deduce that at least some meaningful % of the shortage/inflation situation was caused by the UBI-like program.
I would agree with that. I wish there was a way to know how much though. There was an undeniable impact of giving people “free money,” but it doesn’t seem like most Americans received very much. Most of the people I know of received their 2-3 checks and that’s it. You’d see news articles two years into the pandemic saying things like “Americans finally running out of stimulus money.” It made me laugh because it seemed like most people spent that money crazy fast on their bills and very few people were able to actually pocket that cash.
It was the people working close to minimum wage that were most affected - it was common to see small business owners unable to get workers to return because these payments were higher than they were making on the job.
I think this would be the most likely outcome: basic income means no longer needing to work, and even if it just covers the essentials I think a lot more people are going to go that route than most expect.
> We expanded the M1 money supply from $4T to $18T and largely handed it out in a diffuse way.
This is often quoted and either comes out of ignorance or is intentionally misleading. Assuming it's the former, M1 in the US is not a good measure over the time span you are quoting, because there has been an accounting change that significantly expands of what kind of accounts are considered to be in M1.
Agreed, but this is such a red flag that a commenter is not thinking critically. Do they really think we quadrupled the money supply in a short time? And the only effect was 10% inflation? Usually that would disprove all of their other assumptions about the relationship between the money printer and inflation.
Fortunately, the result was "asset inflation", i.e. most of that money went to stock market raising stock prices. That's why consumer goods inflation was so low.
This is false, and is explained by the block of text below that chart. The definition of M1 was changed. Notice the addition of savings and money market accounts.
Thank you for demonstrating the lack of critical thinking I was describing.
> Before May 2020, M1 consists of (1) currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of depository institutions; (2) demand deposits at commercial banks (excluding those amounts held by depository institutions, the U.S. government, and foreign banks and official institutions) less cash items in the process of collection and Federal Reserve float; and (3) other checkable deposits (OCDs), consisting of negotiable order of withdrawal, or NOW, and automatic transfer service, or ATS, accounts at depository institutions, share draft accounts at credit unions, and demand deposits at thrift institutions.
> Beginning May 2020, M1 consists of (1) currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of depository institutions; (2) demand deposits at commercial banks (excluding those amounts held by depository institutions, the U.S. government, and foreign banks and official institutions) less cash items in the process of collection and Federal Reserve float; and (3) other liquid deposits, consisting of OCDs and savings deposits (including money market deposit accounts). Seasonally adjusted M1 is constructed by summing currency, demand deposits, and OCDs (before May 2020) or other liquid deposits (beginning May 2020), each seasonally adjusted separately.
> 1. Financing it. These programs are monumentally expensive. You need to get the money from somewhere.
Depends on the level it's set at, but as it's "Basic" it would just cover basic needs. It would replace unemployment benefit, the non-contributory portion of old age pensions, child benefit, and maybe a few other things. It would also simplify bureaucracy - no need to assess people's circumstances. There have been pilot programmes which showed other benefits, e.g. the Dauphin experiment resulted in improvements in people's health, and a recent experiment in Kenya resulted in people setting up businesses, boosting the local economy. Yes, rich people would get it too, but that would be paid for through increases in higher rates of income tax.
Basic needs are costly, and the programs you mention do not completely cover basic needs. For things like social security, people spend something like half a lifetime paying into it inorder to recieve relatively small payments for a short portion of their life. Child benefits and unemployment are also short duration.
I have no doubt that eliminating programs and bureaucracy will lead to better efficiency. However, I'm not convinced it will be cheaper. I also question the efficacy if the money is less targeted towards those who need it most. It seems the tests are not addressing the aspect of removing other services.
> Basic needs are costly, and the programs you mention do not completely cover basic needs.
If they don't cover basic needs they aren't fit for their intended purpose and should be increased so that they do cover them, if they aren't replaced by UBI.
There are other programs that in combination do cover basic needs for those that qualify by need. You're not going to be able to replacement CHIP and Medicaid with UBI. At least not without extensive bureaucracy on the tax side.
If your country has a national health service, paid for by taxes, medical treatment isn't paid for when you need it and so wouldn't affect the rate of UBI.
Your comment beats me to it! I used to be in favor of UBI, but every point you make is valid. And the so-called Modern Monetary Theory of printing unlimited sums of money without triggering inflation either doesn’t work conceptually, or requires too many ancillary policy changes to ever be an option.
I think a good solution looks more like good old-fashioned workers rights laws that we see in Europe, which includes sector-level wage bargaining. And I would also like to see a federal jobs guarantee that would cause upwards wage pressure in the private sector, while providing a livable minimum wage for all who are able to work.
One huge hole in your plan: the shortages weren't because people suddenly had more money, they happened because a huge percentage of production and international shipping came to a halt. Demand helped but it was not a majority of the problem.
There's a third problem that people perennially ignore: once you institute it, even if circumstances change dramatically, it's politically untenable to stop the program. Even putting aside inflation, even putting aside financing it, this is a tiger you can't dismount.
I feel like that reality and its implications are missing from most discussions of UBI, not to mention the inverse: it becomes politically beneficial to give away more money, even if it isn't sustainable.
This strikes me (a total ignoramus) as the generally balanced and correct take.
One question I have is, how much of that inflationary period has been due to supply issues that would have occurred regardless of stimulus checks?
I share your skepticism about the "lol just tax the rich" approach. I'm not sure how true it is that taxes "hobble our most productive citizens" (what are you alluding to about china?), I generally just think rich people inevitably outmaneuver the government trying to tax them, and that rich people really shouldn't be "earning" that much to begin with (because I think their earnings in most cases has fuck-all to do with their actual "productivity"). I imagine there are plenty of smart people who have thought up other ways of socializing the fruits of economic growth in, idk, better ways.
>If you do it by taxing the rich, you wind up hobbling and punishing your most productive citizens
It's a double stretch to say that (1) the "rich" are the "most productive" members of society, and (2) that imposing progressive taxation on them somehow harms the economy.
Japan’s story is different - Japan has been battling deflation for decades at least partially as a result of a rapidly aging population with zero desire to import workers. Which is not a judgment of Japan, which instead chose to provide a much higher per capita stimulus to its people with a focus on the quality of life of the average citizen.
Japan's ranking on the Human Development Index is ahead of the US. Do you think if they had charted a different economic course Japanese citizens would have a wildly better quality of life compared to US citizens rather than just being slightly better?
Yeah. The easier money is to get, the more willing people are to pay higher prices.
There might be a 0 to 1 issue (people stuck at 0 need some kind of traction) that is at least improved in a practical sense with a small UBI although we still need productivity to continue increasing in order to drive prices down
> The USA did this during the COVID era. We basically implemented UBI. We expanded the M1 money supply from $4T to $18T and largely handed it out in a diffuse way. For the first 6 months it was awesome. And then shortages started spiking and inflation started creeping in. We ultimately had to roll it back.
Yup. And don't forget where most of that money finally ended up - as absolutely massive corporate windfalls. That COVID money went through the economy like shit through a goose and ended up where it always does, in the hands of those that are good at making money.
>"Yes, of course giving people money makes their lives better. It especially works when a very small subset of the population receives such treatment, such that their relative income is higher than those outside the experiment."
I've never seen a UBI experiment which demands that the participants pay more in taxes and forfeit all other welfare benefits in exchange for the payment. Every "experiment" so far has been measuring the happiness impact of the upsides without any of the downsides that would be necessary to make the program work.
The payment would already disqualify you from a significant proportion of existing benefits, because they're means tested and now you have more money. Meanwhile the net tax increase would only be on people at higher income levels, but that would be offset by not having to fund those means tested programs anymore, and further offset by receiving the UBI themselves.
And maybe we could measure some negative impact if someone making $100,000/year had to pay $5000 more in net taxes than they do now, but maybe we're not that concerned about a small impact on someone who already makes a lot of money.
> Look at China's economic situation right now to see how ultimately unproductive that can be.
I’m confused why you think China taxes the rich to take over the poor? Their taxation system is less redistributive than most western developed countries.
> you do it by taxing the rich, you wind up hobbling and punishing your most productive citizens. Look at China's economic situation right now to see how ultimately unproductive that can be.
It speaks volume that we assume that China's rich, who largely earned their wealth through nepotism and party connections are a unfairly taxed meritocratic elite.
the golden years of Western society happened during a period of intense competition with a socialist system , that resulted in large scale copying of socialist redistribution policies(unions, state controlled monopolies etc) without any decay of complexity always assigned to those policies. And many democrcies have now majorities of "rebellious" retro movements that try to reenact that past without grasping the core.
Liberal free market always decays to gilded ages, decays to retro rebellions or a retry of socialism, resulting in a redistributing period. The liberal part of the policy loop has run its disastrous course. And It has produced very little, for the titanic scale it's been scaled too. A crispy planet for a electronic opiate system for everyone.
> The easiest place to take it is via the money printer
FWIW: the easiest way to get people to throw you into a "junk economics" bin is to use terms like this. "Printing money" is, at best, an inside-the-echo-chamber shorthand for macroeconomic finance policy that is only going to confuse real economists trying to understand what you're talking about. Most of the time, though, it's just a signal that you don't know what you're talking about.
This argument seems rather disingenuous. Are they literally printing money? No, not to any significant degree. They're not running the presses 24/7/365 or anything like that.
Perhaps, though, you'd care to explain how, if you grow M1 from $4T to $18T, it matters whether you do it with physical printing presses or pushing buttons on a keyboard. The overall effect is the same.
In fact, the printing press method would be less impactful. There's a physical limit on how fast a mechanical press can run. With the keyboard method, you just have to type in a few more zeros at the end.
> Are they literally printing money? No, not to any significant degree.
Right. So talk about what they are actually doing, be it routine deficit financing (not "printing" under any reasonable definition) or QE (arguably I guess, depending on how you want to spin the repurchase scheduling). Under no circumstances does the government actually create money "out of thin air".
Which under some circumstances is fine. If you're discussing a political topic with a bunch of like-minded gold standard fans (or whatever), then you can use this as a shorthand for "the fiat currency policy we all hate". And no one is confused.
But THIS subthread is actually talking about financing public policy. So trying to shorthand the issue away is just a rhetorical trick. If you want to argue against public financing of a UBI, you have to do more than just shout "Money Printing!".
Edit, because I missed this bit:
> if you grow M1 from $4T to $18T
I shouldn't have replied. That's a 100% bad faith argument, owing to a redefinition of the M1 money supply in May 2020 (to include "savings" accounts, which were previously ignored) that created a big discontinuity in the graph. You can argue that the new measurement is better or worse than the old, you can't use a delta between them as "growth". That's just a lie, and you should know better.
Actually, I'd forgotten about the redefinition. You pretending that when someone says "printing money" they mean physical printing presses with ink and paper, rather than a figure of speech, is the actual bad faith argument here.
No, I'm saying that when someone says "printing money" they're engaging in demagoguery instead of discussing the issue on merits. Which is fine, if you're making a political point about your enemies within the in-group that understands your shorthand[1].
But this subthread is an actual point about economics and public financing. You can't demagogue that.
[1] c.f. ACAB, etc... Every partisan subculture has its jargon.
Okay, since you're apparently never going to respond to the actual issue about why (e.g.) jacking up the money supply by pushing buttons at the Fed and Treasury doesn't have the same effect as running the printing presses (more so, in fact; as I pointed out there's a limit on how fast presses can run), I think we're done.
First you tried to deflect by going off on my mistake about why M1 increased so much, even though that was completely beside the point -- although it DID increase massively, just not as much. This is akin to your pedantic non-argument about how increasing the money supply doesn't generally involve running physical presses.
Now you're trying to deflect by calling me a "demagogue".
I will ask you one last time, and if you don't give me a straight, non-evasive answer (which you won't) we're done.
How, in actual effect, does increasing the money supply $n trillion by running the presses faster differ from the Fed/Treasury increasing the money supply by typing numbers into a keyboard?
Hint: it doesn't. But you can't admit it because that would demolish your entire thesis.
> although it DID increase massively, just not as much
It's shrinking very rapidly as we have this silly argument, even as you'd admit that no action was taken to reduce spending: https://fred.stlouisfed.org/series/M1SL
About 60% of the increase over the pandemic has disappeared, as people spend down the accumulated wealth. That's not "massive", and just not consistent with the idea of "money printing"; the analysis is complicated, and has as much to do with supply effects (not as much stuff to buy due to impeded production/shipping) as it does with pandemic relief aid.
I'm happy to have this discussion and to educate you about these issues. But not if you insist on painting things with ridiculous smears like "printing money" (and especially when you start with outrageous claims that are clearly lies you picked up from partisan media).
> It's shrinking very rapidly as we have this silly argument, even as you'd admit that no action was taken to reduce spending: https://fred.stlouisfed.org/series/M1SL
That's not answering the question.
> educate you about these issues.
Oh, DO be quiet. You could "educate" me by actually answering the question, but (once again) you haven't.
What's your question, exactly? "Can inflation[1] be caused by other means than literally printing money?" Of course it can. That's not a license to call things like supply shocks or trade wars "printing money" though. Your hyperfocus on this one gotcha point is betraying your ignorance about the actual economics, which is my point you seem to be trying to ignore.
[1] Actually you started with money supply expansion, which isn't really the same thing. But I think you're really talking about inflation.
> You need to get the money from somewhere. The easiest place to take it is via the money printer and the second is from the rich.
universal basic dividends.
a % of shares in all companies should go into a public equity fund.
dividends from this fund are then distributed to everyone equally.
we already contribute to the wealth of these companies, if we search on Google or post on Twitter, why should we not get a share in the success of those companies?
Above Dunbar's Number[1], we require vast bureaucratic scaffolding. The purest example is the military. Ranks; uniforms; courts martial. People at scale tend toward tyranny. Every. Single. Time.
Our purported globalist saviors are not our friends, and ideas like UBI end in tears.
Decentralize. Empower individuals. Minimize the number of people whose job it is to boss everyone else around. And then ensure those bosses are traded out at a regular frequency.
Aristocracy in its explicit and implicit forms is an idea that is really no longer needed, so let's break the habit.
> If you do it by taxing the rich, you wind up hobbling and punishing your most productive citizens. Look at China's economic situation right now to see how ultimately unproductive that can be.
What hogwash, if there's anything that's apparent today it's that the rich do not get there either by working hard or by being more smart. They just happen to have rich parents. Why are we ok with billionaires like elon musk who spend most of their day tweeting to control society changing amounts of wealth?
The richest families in the world pay 8% income tax. To pick a random rich guy, Bill gates makes $98M/year. You could literally tax him 90% and he'd still be making more per year than most Americans make in their lives.
> Instead, we should foster competition, incentivize innovation, and let markets do their thing
Tell me Atlas Shrugged is your favorite book without telling me Atlas Shrugged is your favorite book.
>If you do it by taxing the rich, you wind up hobbling and punishing your most productive citizens.
Here's where I call BS.
>Look at China's economic situation right now to see how ultimately unproductive that can be.
Isn't it a wee bit apples/oranges to say this about a totalitarian communist country with a converging set of issues (population pyramid, needs to import food, stressed water reserved, pollution)... nah it's definitely the rich people, we need to protect them! /s
When has UBI actually every been tried? I don't think any trials really qualify as "Universal".
IMO the universal part is the hard part and changes it drastically. Compared to a small limited trial of giving people money, where does it all come from when it's actually universal? And what are the effects on the overall economy when it's universal?
Yeah, many of the quoted examples miss the “universal” part:
> recurring cash relief to low-income residents for 2 years
> Finland launched a program to give €560 ($616) a month to 2,000 unemployed citizens
> doled out monthly unconditional sums of $500 to 125 low-income participants for two years
My contention with UBI is that if you give cash to everybody, it ends up being largely a wealth transfer to the rent seekers in society who can just raise their prices because more cash is now chasing the same amount of supply.
This is why you should couple UBI with an eye-wateringly (90-95%) high tax on Land rents, (i.e, the value of the unimproved raw resource. "Land" is more than just plots of terrain: Mineral, Water, and Wildlife/Fishing rights - along with radio spectrum, etc all fall into this category.) Improvements and value-adds from human activity remain profitable, gatekeeping access to resources is not.
Economically speaking, your ability to compete for the extra disposable income is the same as anyone else's, but that money originated in the taxed rent from the Land you control, and any elasticity in demand for your Land caused by the increase in cash running around is priced in - if more people need what you have, your taxes increase along with it.
What remains for you to profit from is what service or value you add above and beyond the market value of the underlying Land.
One form of UBI is essentially a negative income tax rate for people making below a certain line.
As more and more jobs get automated away, we will either become a society of wage slaves with a small upper class controlling trillions (wait a minute...) or we will distribute the benefits of an automated society to all people.
A lot of it is pretty hand-wavy and I'm not sure how legit it is. I'm posting it because they claim it won't cause taxes to increase for the majority of people. Instead, it comes from mainly corporate taxes and other sources.
Of course, it seems likely that this just passes on the cost to ordinary people in the form of increased costs for goods and services. As for inflationary effects, I'm not qualified to say.
It's already the former. Have a look at all of the homeless Americans and sleeping in cars borderline working poor in shit gig economy jobs working for crumbs. It's a result of decades of political corruption and apathy following widespread, cult belief in "effortless" meritocracy and trickledown Reaganomics.
It doesn't depend on how it's funded. It's a simple mechanics: once the word gets out that everybody is getting free money then all the companies raise their prices, trying to capture that money, because why wouldn't they?
Greedflation already exists without any type of UBI in place. UBI is not meant to combat greedflation. You're right to be worried about greedflation, but being against UBI because greedflation exists simply doesn't follow.
Alaska has had UBI for a while. It has been studied up and down. Studies show since implementing it, poverty has been reduced, crime is down. I haven't seen anything suggesting it encourages greedflation. You are making this claim about UBI, but the difference is you aren't qualifying it beyond with what appears to be your personal thoughts on the matter.
If you mean the Alaska Permanent Fund, according to wikipedia:
> The amount of each payment is based upon a five-year average of the Permanent Fund's performance and varies widely depending on the stock market and many other factors.
> The lowest individual dividend payout was $331.29 in 1984 and the highest was $3,284 in 2022.
That's not what people are generally talking about with "basic income" - it's not anywhere near enough to meet basic needs, and it's not reliable due to the fluctuations.
I agree with you on this, and I think the best reference point on the question of greedflation specifically would be that pensions exist and yet pensioners often get discounts.
Look at Poland since 2015. We don't have UBI per se, but we have uncoditional handouts of free money to families with children, which goes to about 4 millions of families (so, like half of them).
And while the programme is not universal nor the handouts are very big (around $200 per child per month) the costs are astronomical and it’s already driven inflation in the country (along with other social programs). I can’t imagine what would happen to economy if this was expanded.
This is a good point, although all of the trials I can think of have had some element of reducing the means-testing, or reducing criteria for inclusion, which I think is valuable in testing the UBI concept.
I'd like to make food stamps automatic for everyone. It makes pretty good sense to me. Everyone who has a driver's license or is enrolled in school or is registered to vote gets food stamps. The most hateful southern baptists in my family who are still screaming about Obama's death panels can still agree that donating to food banks is a good idea. I can understand people who say "I don't want to pay higher taxes to support other people." I think that's a shitty philosophy, but I can understand where they're coming from. But if we make food stamps universal, then those people get the benefit they're paying taxes for and some of them will stop complaining. It ensure a basic level of public health and removes the stigma from receiving and using food stamps.
After we take care of that and instill the idea in everyone's mind that automating the basic necessities is good for everyone, we can work on housing, healthcare, and higher education.
Why is food different from roads? Schools? Police? Fire departments? Have these people ever made an insurance claim? Set foot in a state/national park? Cashed a stimulus check? etc.
My point is, someone saying "I don't want to pay higher taxes to support other people" has already lost the plot. They are already receiving benefits paid for by someone else. If they weren't already convinced that this is a good thing, they're either not paying attention (in which case, why would they start now?), or care more about keeping poor people suffering than improving their own lot in life (which, in my experience, is more likely).
I have seen people complain about paying taxes for schools when they don't have kids, and all your other examples go back to the taxpayer in some way. Food stamps are like the school one, they don't go back to the taxpayer - they're paying without getting anything back, hence complaining.
GP's idea might be a decent way to sidestep that - at the very least it's tighter in scope so the negative effects would be limited.
> The most hateful southern baptists in my family who are still screaming about Obama's death panels can still agree that donating to food banks is a good idea.
I expect they would argue that a) they don’t agree that being required to donate is a good idea and b) the food bank can turn people away if they’re not deserving and has its own stigma, which are both part of the goal
Make them transferable and I agree. If I get the food stamps and can easily transfer them to my adult kids, that would be great. Yes, it would probably mean drug dealers will take food stamps, but whatever.
Most of these are either fairly short-lived limited pilots, or aren't really "UBI" (e.g. Alaska's $1,600 a year hardly qualifies as UBI as it's just enough to buy groceries with, never mind rent or any other basic needs).
A large population with basic needs met and nothing particular they have to do is untested. I don't really know how that will end, but I fear it may not end especially well. Let's be real: no one works at McDonalds because they have a great passion to fry burgers. SpongeBob was a lie! Would extra income from McDonalds be enough to motivate people to do this kind of stuff anyway? Perhaps. It's currently unclear.
I'm somewhat skeptical that large changes are afoot though; current AI systems aren't really good enough for most things and it's unclear what future developments will bring. And you can't automate frying burgers or stock shelves in the first place (well, not without huge investments that just aren't worth it).
Most of these are either fairly short-lived limited pilots, or aren't really "UBI" (e.g. Alaska's $1,600 a year hardly qualifies as UBI as it's just enough to buy groceries with, never mind rent or any other basic needs)
You seem to misunderstand what UBI means. UBI doesn't imply an amount of income to keep someone at or above the poverty line (or to meet all of one's needs). There are types of UBI: partial basic income (which is what most people with any sort of political or economic power talk about, including the examples in the article, which includes Alaska's Permanent fund) & full basic income.
It's clear that from the introduction it's intended to mean "unconditional cash payments to people so that they can meet their basic needs". That's a literal quote from the article. And this is also how UBI is commonly understood in general.
If you want to use some different definition in some contexts then that's fine. But in this context it doesn't make a lot of sense to insist on your definition as the One True Correct™ one.
That sentence doesn't suggest what you were suggesting, that UBI alone must address all of one's basic needs. The single sentence is also part of a larger article full of even more context.
And this is also how UBI is commonly understood in general.
Search google, search twitter. Look up Andrew Yang's "freedom dividend" platform. You'll see that it's not my definition that's in question.
Sure, but it's not clear if there are enough people who will do that. And we also need to ask the question: what if there aren't enough jobs? Everyone without a job should just live off the bare basic necessities without entertainment? Or what will that look like?
There's a lot of optimistic views about UBI, but here is what I think it will be like realistically: poverty. Surviving, but not really living. The bare minimum to not riot in the streets. This is how these sort of things have usually worked out in the past. "Bread and circuses" etc.
As I said, I'm skeptical that all this post-scarcity everything-is-automated future will come to pass any time soon, but if it does, we almost certainly need to do more than UBI. A lot more. Sam Altman is mentioned in this article: OpenAI is built on all of our work. Whether that's "fair use" or "pilfered" is a matter of opinion, but neither view changes the fact that OpenAI takes the works of our culture that we all contributed to and uses it for private profits it keeps to itself. That's not really a huge social problem if it's "just" a company – maybe you can consider it unfair, but that's something else. But if OpenAI and companies like it really do eat the world as the AI maximalists claim it will we end up with a situation where an exceedingly tiny minority will have an enormous percentage of the world's wealth, all of which is very directly built on the public's work, and it's no longer "just" a company with handsome profits.
That entire situation will be spectacularly untenable. So what do we do with that? The entire "OpenAI is a foundation for the public good" thing went out the window as soon as green bits of paper became involved (and of course that was going to happen).
That's not the bit Sam Altman wants to talk about.
"Silicon Valley philosophy" like this is usually only remarkable in how profoundly shallow and self-serving it is.
> Most of these are either fairly short-lived limited pilots, or aren't really "UBI".
True, but the problem is that unless it's introduced, with the intention of it being permanent, there's no way of proving it would work that would satisfy its detractors. And even then, if it's introduced somewhere and works there, people would still argue that it doesn't work in their country.
Actually, Spongebob was (originally) a depiticion of a real-life personality; the type of person who is truly so sheltered, optimistic and naive to actually ENJOY his job, even though he is supporting an immoral, materialistic crab who has ptsd from being in the Navy and hoards wealth as a coping method.
I don't think anyone is doubting that giving people money improves their lives. That seems to be the conclusion of these studies. However what is seemingly _never_ studied is how to finance such an operation. The money has to come out of the system somewhere. Is it with new taxation on XYZ, or slashing services somewhere else etc.
I’ve seen proponents suggest we take the money from other welfare programs, as paradoxically the means-testing overhead costs so much that we can afford to pay everyone $X instead of thousands of workers to process thousands of welfare applications. I haven’t seen specific numbers about this though.
Edit: I'm failing to find numbers to support this now.
The 2022 budget was $1.2T across all welfare programs[0]. This includes programs people don't normally consider welfare such as the Child Tax Credit and parts of the Pell Grant.
There are currently 350M people in the USA [1]. $1.2T / 350M People is $3,428/person/year. Please note that while significantly less, there will still be some overhead in the UBI program so the actual number is lower.
This also doesn't include state budgets for welfare.
Meanwhile, the median social security recipient gets about $1,700 per month. I don't think most people are going to get behind a "Rob grandma's pension so a bunch of college socialists can write poetry instead of working (and even then actually can't because they're bad at math)" program.
Social security is another $1.4T/year budget that is not considered welfare [0]. Medicare is another $0.9B [1] that isn't considered welfalre [1].
If we raided these programs, along with the previously mentioned programs, we reach an annual budget of $3.5T. The per person math is $10,000/person/year. A two person household would very near the federal poverty line.[2]
It's starting to look like it could be viable if we add state budgets into the mix, and find another solution for elderly healthcare.
I hate welfare programs as much as the next libertarian leaning conservative, but overhead from means testing (and admin overhead generally) really isn't a major expense. Medicaid overhead is a grand total of 5% of the program.
It's really just UBI advocates handwaving away the question of funding.
The cost of means testing isn't just what you see on a budget. It's also all of the people who are eligible, but incapable of demonstrating that fact because of some byzantine requirements imposed on them to show eligibility[0].
There will, of course, be people who consider this to be a feature, not a bug. That's an ideological difference outside the scope of this comment.
[0] Source: I know someone applying for long-term disability. Getting an answer to a question as straightforward as how to sign the paperwork (wet signature, digital, print/sign/scan, fax?!) has been a challenge for them. It's also unclear if the three different signatures needed of them are even to be done the same way. This is a generally competent, functional person I'm talking about, by the way.
That's not a "cost" of means testing though, at least not in the accounting sense. If anything, that causes the program to spend less money. Like you said, whether or not otherwise qualifying people get excluded from a welfare program is a good or bad thing is up for debate, but if it has any effect on the cost of a welfare program it only reduces it.
It's a cost borne by society at large and specifically by the people who can't get enrolled in the programs they're eligible for. Not every cost is easily measured by accountants.
> I don't think anyone is doubting that giving people money improves their lives.
I think this is actually more controversial than you're giving it credit for. Giving money as opposed to other non-monetary forms of aid is quite a radical concept. Many people believe that giving money to the poor results in bad financial decisions, short term spending, and few long-term effects. This is the main belief that the trials of UBI so far have disproven.
Another example of this is charitable giving. Most charities tackling poverty focus on giving food, water, medicine, etc, whereas studies have shown that giving money is a remarkably efficient way of donating. Give Directly has done very well with this.
> However what is seemingly _never_ studied is how to finance such an operation
You haven't understood the concept of UBI. It doesn't have to be "financed". It's a different way of assigning tax and benefits.
E.g. imagine a population of only two people, Alice and Bob. Currently Alice pays £100 in tax, and Bob receives £50 in welfare payments because he's unemployed.
You could set up a UBI scheme to be net zero. Under this UBI system, Alice would pay £150 in tax, and receive £50 in UBI. Bob would receive £50 in UBI instead of benefits.
It doesn't have to cost anything (in theory). You could make it redistributive, but it doesn't have to be.
The proponents of UBI would say it's worth it because you wouldn't have the expense and unfairness of means testing for benefits, and Bob would have the incentive to look for work (any work) without any reduction in benefits. In addition people could do things like start companies on a small guaranteed wage with less risk.
Opposers of UBI would say some proportion of people wouldn't work at all if they were guaranteed an income.
There are likely many more advantages and disadvantages that would only become apparent if a country actually tried it.
Please try to do some actual math here. What annual UBI are you targeting, and how much could be funded from pillaging existing spending vs. new taxes?
We did this during the pandemic and it resulted in inflation that we're still trying to deal with. Exactly the kind of inflation that detractors claim would happen.
Safety net, yes. UBI and other redistributionist fantasies, no.
The thing that I question is why is this requirement for this fiscal balancing only required for giving money to poor people? In 2018, the US Government added $2 trillion to the US national debt to give a 5k/capita/year subsidy to the top 5% of earners.
If we're already in the business of chucking money at people in fiscally irresponsible ways, I don't see why changing the target from "rich people" or "oil companies" to "everyone" is suddenly a problem.
Right. And if they can print it from thin air and just give it to everyone, then it has no actual value. Price discovery will force significant inflation on every class of product and service because that is what people will be buying with it. Its effectiveness drops with scale, which is what they are not testing. It's great that UBI works in a lab, but this experiment has been run at multiple points in history and absolutely thrashed societies every time without significant external input (conquest, exploitation, etc.).
Money by definition derives its value from its scarcity relative to the economy it is representing. There is no free lunch here.
Yeah, as much as I hate the inefficiency of some wellfare programs in the USA - their inefficiency is a feature in that it provides a kind of scarcity.
Depends on how much you print, and what happens with supply as you do so. Some countries (eg. Japan) are struggling to increase inflation, so this seems like a straightforward policy. At the same time it can solve the problem of weak consumer demand: productive factories making desirable goods that citizens nonetheless feel too poor to buy, causing those factories to shut down, resulting in the country getting poorer in real terms. After all, "demand" is desirability times spending power: if spending power is low in your target market, then demand is low, even when your products are desirable.
Putting money in the hands of the largest number of people works well with production economies of scale. For the same total quantity of money, having it concentrated in a few hands means your society is incentivized to produce a few yachts and private jets, and too low on the quantity curve for economies of scale to make that production efficient. When that same money is distributed, the incentives are to produce large quantities of vacuum cleaners and washing machines, where mass production is very efficient, so total utility can be higher.
We are actually, right now, "printing money" out of thin air. The process is called "fractional reserve banking" and is a cornerstone of modern economics systems. You can of course read up on it, but, suffice to say, if we did not do it, financial systems would be extremely unergonomic.
Hyperinflation is one of the things that could happen, when you do it badly, I suppose, but there is a lot of ways to get hyperinflation, if you do things badly.
Thank you for insulting my intelligence by assuming I don't understand fractional reserve banking. My point remains. A government does not have carte blanche to inject money into an economy without hyperinflation beyond a certain point.
If you were a little more honest and a little less into making a point of being offended, you would probably find it fairly easy to concede that the statements you made in both comments are substantially different.
What is useful is thinking about money sources and money sinks. As long as the (source rate - sink rate) ≅ Δvalue of goods an services, inflation is checked.
"Printing money", paired with a comparable sink, is completely fine and a more useful tool than "never print money". The biggest roadblock we have when it comes to employing this tool is that our system of governance has different systems when it comes to monetary and fiscal policy that over-complicate its use.
Printing money out of thin air makes existing money worth less. So it is effectively a tax by another name, you are taking the value from the people who have money now, without actually changing the balances in their bank accounts. And it's regressive, since there's no way to limit inflation to any selected demographic.
The folks down-voting you down appear to have no problems with hundreds of billions of dollars spent on War every year - the money for that was printed out of thin air. The current U.S. Biden administration even removed the debt ceiling to do this!
The US has raised the debt ceiling multiple times across multiple administrations. And the debt ceiling isn't raised so that we can pass a specific bill or take a specific action, it's so we can pay for the bills and actions we agreed to months beforehand.
If we make corporate tax to e what it was historically normal, and tax the wealthy-wealthies to a reasonable level and close all ridiculous loop-holes, then it can be zero-sum. Or even profit.
I'd have to see their argument. A basic "better things aren't possible because where will the money come from?" Isn't possible to engage with seriously. We don't fund our state with gold mines.
Yes we have? There's an ongoing funding crisis for Ukraine's defense, and there are legions of conservatives who are mad about the trillion + spent blowing up Afghanistan + Iraq.
Taxation in the US came about to fund a war.
Money is in the top-three concerns people have about war; it's right after lives lost and infrastructure destroyed.
Bring back the 70% corporate tax rate that was considered normal when Reagan was elected. That should give us a solid start. After that take all the money from every billionaire. You can have up to $999,999,999.99 in your bank + assets, and everything after that goes to healthcare and UBI. If you get to a billion, we'll name a dog park after you and you get a little trophy that says you won capitalism.
More importantly though, why is it that the funding of vast government expenditure is only a problem when it stands to benefit the working class? We always have heaps of money for tax cuts for the wealthy, blowing shit up overseas, and buying this year's crop of tanks to replace the ones we're about to shove into a field to rust. How many millions in PPI loans were forgiven, when most people got maybe $2,400 total over COVID when the economy damn near imploded?
70% corporate tax rate will get you another Reagan.
It's a fast track to destroying entrepreneurship, reducing competition to introduce new, better products or lower prices of existing products.
This is bad for the middle-class consumer because they'll have less to buy, and fewer places to work at.
Furthermore, even if you went full Stalin and confiscated the entire wealth of all the billionaires, that's only $12T [1]. Sounds like a lot? It's a whopping $1500 per person in the world. You'll completely obliterate the economy for the ability to give everyone a check for $1500. One month later, 95% of that money will be spent and back in the hands of innovators and value providers.
> 70% corporate tax rate will get you another Reagan.
What do you mean? We still have Reagans, they never went away.
> It's a fast track to destroying entrepreneurship, reducing competition to introduce new, better products or lower prices of existing products.
Right America wasn’t even remotely an economic power until the 80’s. How could I forget?
> Furthermore, even if you went full Stalin and confiscated the entire wealth of all the billionaires, that's only $12T [1]. Sounds like a lot? It's a whopping $1500 per person in the world. You'll completely obliterate the economy for the ability to give everyone a check for $1500. One month later, 95% of that money will be spent and back in the hands of innovators and value providers.
It’s not confiscating, it’s tax. Tax everything above one billion at 100%. It’s not one time, it’s every year. And it’s not like we wouldn’t still have incredibly rich people, we just wouldn’t be permitting them to lock up entire GDPs worth of money in nothing.
Like if you think there are tons of people out there who will refuse to create businesses because we cap wealth at a mere, paltry one billion dollars, I think that’s a those people problem not an argument against that idea.
They'll get elected in 49-state blowouts like he did, and for the same reason.
America's economy went from nowhere to #1 under a regime of almost no tax and regulation at all during the 1800's until 1914.
Even then, corpo's aren't actually paying 70%; there's a ton of loopholes and deductions. A high tax rate like that just favors the large incumbents and makes it hard for small businesses with no tax lawyers to get off the ground.
Also, oh my god, if you tax the wealth of all the billionaires at 100%:
a) it's confiscation
b) they won't magically keep churning out 12T in assets every time you confiscate it. Its wealth, not income.
c) the money isn't locked up in anything; how can you possibly believe this. It's invested in the economy. It's lent out to businesses and governments in the form of bonds. It's deployed capital in the form of stock.
Economic literacy is in an absolute shambles. We need to urgently improve the teaching of economics to kids. Between this, the common misconceptions about inflation, supply and demand, and people not knowing the difference between net worth and income, I'm getting more and more worried.
> They'll get elected in 49-state blowouts like he did, and for the same reason.
Again you are speaking as though this isn't status quo. A huge slice of our political landscape is people who still think trickle down economics works, tons of politicians are elected running on platforms for tax cuts. Reagan's politics live on and are largely responsible for how shit the world has become over the last 4 decades or so.
> Even then, corpo's aren't actually paying 70%; there's a ton of loopholes and deductions.
Then close them.
> a) it's confiscation
I don't care.
> b) they won't magically keep churning out 12T in assets every time you confiscate it. Its wealth, not income.
Yes, and I am suggesting the tax be based on net worth, not income.
> c) the money isn't locked up in anything; how can you possibly believe this. It's invested in the economy. It's lent out to businesses and governments in the form of bonds. It's deployed capital in the form of stock.
It's not going to the workers, which is why we need UBI. People asked "How do we pay for it" and I have answered that. I don't care about lending to businesses, I definitely don't care about the debt traps set for the global south's nations, and frankly, I don't really give a shit about the economy either. We hear all about how great the economy is doing year over year, and me and my friends get more and more broke as it does. If the economy's doing great, it's not doing great for me or anyone I care about, and insofar as that's the case, why the fuck should I care if it continues to do great?
What goods an economy that doesn't serve the workers? If the economy is doing so great, why am I paying through the nose for every fucking service and resource I need? If the economy is so great, why are so many people living check to check and barely making ends meet? If the economy is so great, why is every fucking thing getting more expensive? If the economy is so great, why does a house cost 8 years of salary?
Great for WHO? It ain't doin' shit for me personally.
> Economic literacy is in an absolute shambles. We need to urgently improve the teaching of economics to kids. Between this, the common misconceptions about inflation, supply and demand, and people not knowing the difference between net worth and income, I'm getting more and more worried.
I didn't say income, you did. I said "bank + assets" but if you want the fancy words, yes, net worth, held stock, bank accounts. Etc.
> A huge slice of our political landscape is people who still think trickle down economics works, tons of politicians are elected running on platforms for tax cuts. Reagan's politics live on and are largely responsible for how shit the world has become over the last 4 decades or so.
The problem here is the need to distinguish between two things that are complicated to distinguish.
There are a lot of regulations on the books with a decent cost/benefit ratio, and a lot with a poor cost/benefit ratio. Everyone benefits from removing the latter, but there are thousands of individual rules and you need someone who understands them to distinguish one type from the other. But these are often the exact people (lawyers, compliance bureaucrats) who benefit from the status quo and don't want wasteful inefficiencies to be removed because it pays their salary.
Meanwhile voters don't have the bandwidth to dive into the details, so in politics the candidates who want to do the right thing just say "we need fewer regulations" -- okay great, let's vote for that guy? But there is another class of candidate who is captured by corporations and says the same words but the regulations they want to get rid of are the ones with a high cost/benefit ratio, only the cost is on the corporation and the benefit is to the public.
You have to find a way to distinguish between them or you're screwed. Just saying "leave the inefficient rules in place and keep accumulating more of them forever" is still you're screwed, you have to actually solve that problem.
> Then close them.
That's what they did at the same time as they lowered the rate. Government revenues aren't any lower now than they were then -- they're higher.
> I don't care.
You don't care that it won't actually generate any long-term revenue? Then what is its purpose, just pure animosity?
> Yes, and I am suggesting the tax be based on net worth, not income.
Which is completely asinine because it creates all kinds of perverse incentives.
Major corporations would end up being controlled by foreign nationals instead of domestic ones because domestic owners would have to sell their shares to pay the tax. Anyone subject to the tax would have the incentive to take insanely wasteful high risk bets because high rates of return would be the only way to cover the tax without losing money year over year and losing everything to the tax over ten years isn't much worse than losing everything in a casino right away. Some assets would be harder to value than others and then trillions of dollars would shift into those assets away from others, which would be several different kinds of disastrous.
There are reasons we don't do it that way.
> frankly, I don't really give a shit about the economy either. We hear all about how great the economy is doing year over year, and me and my friends get more and more broke as it does. If the economy's doing great, it's not doing great for me or anyone I care about, and insofar as that's the case, why the fuck should I care if it continues to do great?
People say it's doing great because they have the incentive to find numbers that allow them to make themselves look good. They'll always say that when they're in charge. In fact there are some problems right now, but don't think for a second that adopting poorly considered policies couldn't make it a lot worse.
Considering the price of eggs skyrocketed due to an outbreak of avian flu forcing farmers into mass culling tens of millions of egg laying hens across the US, it's probably not the money supply that caused that.
They increased the money supply which led to increased prices, so they increased the money supply which led to increased prices, so they increased the money supply which led to increased prices, so they increased the money supply which led to increased prices, so they increased the money supply which led to increased prices, so they increased the money supply which led to increased prices, so they increased the money supply which led to increased prices, so they increased the money supply which led to increased prices, so they increased the money supply which led to increased prices, so they increased the money supply which led to increased prices, so they increased the money supply which led to increased prices, so they increased the money supply which led to increased prices, so they increased the money supply which led to increased prices, so they increased the money supply which led to increased prices, so they increased the money supply which led to increased prices, so they increased the money supply which led to increased prices, so they increased the money supply which led to increased prices, so they increased the money supply which led to increased prices, so they increased the money supply which led to increased prices, so they increased the money supply which led to increased prices, so they increased the money supply which led to increased prices, so they increased the money supply which led to increased prices, so they increased the money supply which led to increased prices...
Universal Basic Income has never been tried, because all the trials lack "Universal" component to it, they are limited in scale.
Once you start giving out free money to millions of people the only result is inflation, and people receiving UBI would not be better off at all.
In fact, the closest thing I can think of that would be similar to introducing UBI was "500+" program in Poland, which, as the name implies, was about giving families 500 PLN monthly per each child that they have. As you might have guessed, inflation in Poland has been brutal since then.
I would like to counter with first hand observed real world evidence.
Raising the minimum wage near where I live (Seattle area) has raised the prices of everything. Rent seeking land owners raise their rents, which passes through to everything and absorbs the water trying to sate the parched desert.
IMO either directly supplying what UBI is supposed to provide, or encouraging local supply to match the market need, thus driving down cost with competition as demand is finally met are how consumer welfare / buying power can be increased.
Funny that you blame landlords off the bat as opposed to the fact that everyone who employs folks at minimum wage is forced to raise prices in order not to go out of business.
Every business who is raising prices to support paying their workers minimum wage are at fault.
Minimum wage laws are a trailing benefit. Always behind the times. Every raise to the minimum wage is a (partial) catch up to where it really should be in terms of the concept of a living wage (for anyone - not the Republican talking point, entirely invented out of thin air, that it's meant to be for teenagers with part time jobs).
Those business owners, until each advance, are already making out at the benefit of their workers. So you can blame poor planning, poor foresight there.
And if that's still a painful pill to swallow, rather than "government hates small business", then as another reminder - you have no constitutional right to a profitable business.
I don't think you understand how businesses even work. If a company has to charge X amount to stay above water, and you raise wages, X has to increase. This isn't about some "constitutional right to a profitable business." It's that if the business isn't profitable, it goes under, and then no one has a job because there's no money to pay them with. Is that what you want?
I am saying businesses KNOW that the minimum wage is behind where it should be, so when it rises to where it should be, that is not an attack on them. They should have foresight. The minimum wage rising is making those employees whole, not giving them an advantage.
Yes, costs increase. Failure to plan for that is poor planning. Maybe you should have smaller expenses, instead of expecting society to allow you to underpay employees. Maybe the owner doesn't need a new Mercedes or a second international vacation for their family that year.
If paying workers a liveable wage makes your business not profitable, then why is it on the workers to sacrifice to keep you in the black? Small business owners are often all about bootstraps and such, but believe themselves to be an inviolate part of America.
To be very clear, small business is very important. However, it is not more important than people being able to afford food and shelter. The poverty line, which is used to help determine the minimum wage, is set at "3 times the cost of minimum dietary requirements in 1963". It doesn't cover shelter at all.
Looking at inflation alone, minimum wage should be hitting or exceeding $20/hr. Small businesses who have coasted - or struggled - paying employees $7.25/hr for DECADES (fun fact, the gap between minimum wage increases gets longer and longer every cycle) shouldn't be expecting a free ride just because "small business!"
There are ways to have a profitable business that pays an appropriate wage. Sometimes that comes at the cost of owner dividends. So be it.
minimum wage can be confused with UBI, because it has a disproportionate (positive) effect on the poorest - a significant % boost to their disposable income.
There are a number of effects that boost disposable income in the US: lower tax brackets, tax credits, minimum wage, etc. I don't think anyone is arguing that people need to be poor, just illustrating that it's difficult to really say what the effect will be of increasing disposable income.
Isolated studies of UBI suffer from this same problem. A localized increase in spending power may not tip the wider economy, but if everyone had it? That really might. We just don't know.
"Universal Basic Income Has Been Tried over and over Again. It Works Every Time"
Depends on how we define "works" and also on the scope. All of the examples given involve small sample size programs that end rather quickly, programs that are not universal but based on some need, or programs funded by state owned natural resources (oil).
I appreciate the examples and some of them history around them. I don't agree with the title since most of these are small, short programs, and they are usually not universal. These sorts of tests do nothing to explore macroeconomic effects if everyone recieved the same money. They also don't explore longterm sustainable funding solutions.
Americans spend 1/3rd of their income on cars, and 1/3rd to 1/2 on housing.
UBI is not going to fix this. It will just move the prices of these nessecities up like we saw durning the COVID stimulus.
America and most of the developed world is stricken with a supply problem. Car dependency is resource intensive and housing is in such short supply that it costs 2x what it would in an efficient market. Any attempt to fix it on the monetary side via ubi or minimum wage is a waste of time. Although, if we did fix it, then UBI would be great, but probably not really necessary.
As long as we dont increase housing stock (at least in the United States) if we implement this more universally, the money will just further increase the value of real estate and make homes more expensive.
In the US, we gave money to people during the pandemic. Worker shortages in low-skill labor resulted and inflation hit 10%. I think that's the major flaw - young, childless people without responsibility see no reason to work, when they can watch Netflix all day, either paying their mom some token rent or sharing a flop house with a bunch of friends.
> Fears that the experiment would engender laziness in participants were not borne out in the project’s findings: “The ‘laziness’ contention is just not supported by our findings,” the chief data analyst of one of the experiments said. “There is not anywhere near the mass defection the prophets of doom predicted.”
There is no control available; we don't have a second population of people who did go through the beginning of the COVID pandemic, 2020 political environment, and so forth, but did not receive the stimulus package.
I suggest looking into some basic experimental design texts if you're interested in why this is so important!
You can't possibly tease out all the different causes of the effect you're discussing here. Are you sure the worker shortages weren't due to the inflation? Much of that was greedflation, where companies raised prices due to the crisis and then kept them high, but wages didn't go up, so some people - especially those with long commutes - were actually working at a loss.
Not to mention that the amount given - a total of $3200 to childless people over an entire year - amounts to around 3 months of an average 1 bedroom apartment's rent in America in 2020, much less in cities, and not including groceries or utilities. As a young, childless person who got the full amount that year, it gave me exactly what I needed to be able to move out, but certainly wouldn't have sustained me - even in a "flop house" - long enough to really avoid looking for work.
In the US, we gave money to people during the pandemic.
We increased unemployment benefits to the point where for many people it was more than their previous income. Of course people weren't going to be excited to effectively lose money by taking a job. That's not at all a UBI which pays whether or not you're working.
"young, childless people without responsibility see no reason to work" doesn't seem supported by data. If their workplaces shut down where are they supposed to work?
UBI is the weirdest thing. I'm certainly no fan of an economic system which casually threatens each of it's member with starvation and homelessness if personal misfortune strikes. But universal basic income is something different than support for someone in need. It has to be paid by someone, but this someone isn't ever mentioned. It's somehow the government. But government needs to be funded, too. So ultimately it's an attempt make everyone hand over responsibility of our lives and livelihoods to some opaque sustenance function, without thinking or asking any questions.
Government should be forced to compete in the free market like the plebs if they want money for their programs and salaries, rather than sending men with machine guns to prey on victims. Hope the fucks in office are good at flipping burgers and can cut out the avocado toast.
Any money given to non-property owners will eventually be extracted by the property owners. UBI given to everyone will eventually lead to the same effective poverty we have now and much wealthier landlords.
Why specifically landlords and not sellers of food, gas, cell phones, etc? Everyone would like to raise their prices, but as long as there's competition they can't do so arbitrarily.
not just landlords. Property owners as well. You extract wealth from the system either renting or paying your self rent. It’s just a matter of when you take those gains. Homeowners do when they sale.
As to why it’s unique to housing; you answered your own question: the housing market is arbitrarily limited in supply, which means it’s artificially low competition, which means people that own take an artificially high profit from owning. There are many rent seeking businesses, but housing is so universal and universally fucked that it accounts for by far the largest wealth transfer.
Everything I’ve written is true for housing now, but direct cash injections make it more apparent. See rent prices exploding after COVID stimulus.
The surface of the Earth is no longer every person's birthright. Every damned square inch is "owned", with rare exception. The "frontier" is no more. The wide open spaces are no more. The commons is fully fenced.
I see UBI as a hack that attempts to address this new reality. Instead of a place to plant your flag, you get a stipend.
And an aside: If you don't like the UBI, then alternatively how might you feel about putting limits to land ownership ? Rather than perpetuity, how about replacing ownership with 99-year leases ?
Ignored often: $$ at the lower end make a much bigger difference than same $$ at the higher end.
Tax wealthy individuals a few hundred $/month extra, and it'll hardly be a blip on their radar (although they might make a stink politically).
Give poor people a few hundred $/month extra, and it could transform their lives.
In short: those $$ have a much higher ROI if spent on the lower end of the population. And thus a much higher bang-for-buck when trying to maximize a population's overall well-being.
If you give 500 people a few thousand dollars (in cash or in kind) it makes them better off. If you give everyone a few thousand dollars you cause inflation.
Sam Altman diverting the salaries of folk replaced by AI into his own pocket: "Yeeeerrrrs… I think we should replace those salaries with taxes paid by the people who still have jobs left and don't y'all think I'm just such a wonderful guy for saying such a socially progressive thing?"
What the hell is everyone smoking? Is there no systemic awareness left in the world?
Analogy: Town of houses. Everyone gets help building a house, can fix it up however they like, etc. One day, some person tries to take many house lots, to build a massive temple to themself. As a corrective mechanism, other townspeople repeatedly throw that person into the river, until the person is cured.
The problem with UBI is the vibe — I did not get it so, obviously, no one should
I could post about inflation or hobbling the prime mover class but mostly when I think about people getting money it just sort of feels icky so I make sure to be vocal about my opposition to it on the grounds of my lived experience whenever it gets brought up
UBI is sold to us as a pipe dream by people who will fight tooth and nail to prevent the minimum wage from being raised.
If there's a UBI, why do you need a minimum wage? A UBI gives people negotiating power to decline unfairly low wages, because they don't have to face homelessness or hunger if they're not working.
Really? Thinking of all the people I know personally who think UBI is a good idea, I think all of them would say raising minimum wages is also a good idea. There may be a few fiscally conservative influencers pushing the idea (sama?), but among regular people I think it's only those who strongly support spending on social security, worker rights, minimum wages, etc, who support it.
Universal Basic Income has NEVER been tried. i.e Giving every citizen of a relatively large country (> 10 million) a fixed sum of money every month.
It works on small samples because that doesn't suddenly change the demand curve relatively to supply.
Everytime the govt prints money and gives it as a stimulus check, that is akin to UBI.
The problem is usually supply. One can always pump up demand by dolling out free money. Even if you gave every US citizen a million dollars but the housing inventory doesn't go up, house prices go up by a million dollars.
Money is merely a means fill demand with supply.
Universal basic distribution is a phenomenal idea. e.g everyone receives free basic healthcare (Most modern countries do this).
Capitalistic competition is a good thing when there are multiple players working hard to output the highest quality at cheapest prices.
Governments as single player monopolies aren't the most efficient at distribution.
Universal Basic Supply is an idea I can get behind. UBI has a big gaping hole called inflation.
Living in poverty is expensive and stressful, and can trap you into staying in poverty.
You become desperate, and make very suboptimal decisions. You get rewarded for short-term rewards.
A good example would be jobs. If you could dedicate all your time to applying for jobs, you could maximize your salary - but what poor people can afford that? So you take the first and best job you can find, as you need the money now. 6 months without pay is an eternity. If you're poor, you can't really go longer than 2 weeks without pay.
And when you're shit out of luck, not a single cent in the bank (negative balance, even, with the overdue fees running) you start to look for expensive loans to float you. Payday loans, expensive credit card loans, and what not.
You get hit with late fees for every bill you can't pay on time. Things which are somewhat affordable early on - like getting cavities in your teeth fixed, become horribly expensive down the road.
Those are just one of many, many things. And we haven't even considered the physical and mental stress - the first and last thing you think about, is money.
At least UBI, or some similar system, can remove some of those stressors.
UBI may sound like a worthwhile endeavor to a great many people, but I can't help but think of what we give up with such a system.
If I politicaly dissent from the majority (whomsoever that is or whatever they believe) what stops them—the government as often described—from stopping UBI from those that are deemed "unfit."
By definition they're not doing UBI then. That doesn't alleviate your concern that that's how things might go, but your concern is that UBI might not be UBI.
I'm old enough to remember influential TV people advocating for the revocation of the "rights" of certain people to healthcare, employment or even being allowed to leave their own homes if they refused to be injected with the special science juice. That was just a hypothetical scenario! The sad reality in America is that anything real like UBI would be politically weaponized from practically day one.
I've read the comments on this thread so far and while there are definitely some good points, I think everyone is ignoring a central issue when it comes to welfare: in the US, anything that even remotely resembles socialism is going to be shut down violently regardless of how well it could work. Free education & free healthcare are staples of most western countries, but not the US. Universal basic income has also been given out in some places in Europe. But in the US, all of these ideas are traditionally rejected by the people, and of course, any kind of wealth distribution is going to be countered with strong resistance from corporations, lobbyists and certain individuals.
Bottom line is, regardless of how well it works, all the pieces need to fit a certain way for this to be implemented, which is very unlikely.
The US has free education from kindergarten through high school.
The US also has something akin to UBI, called the earned income tax credit. It's not much to expand that, especially since social security already covers a percentage.
David Graeber argued that there are bullshit jobs, that keep people busy with tasks that are useless for their development or the society.
He didn’t take into account that there are destructive jobs, whose workers significantly contribute to the destruction of the conditions which render the planet habitable.
The planet would be better off if those folks received a UBI for staying at home
UBI essentially occurs for everyone in the United States at age 67. It is called Social Security. "Works" has not been defined in this article, and I'm not sure by reading it I understand what that means. If it were implemented for the population at large, this would drive commodities, and housing prices up. Also, with no limits on its use, drug use would most likely increase, as would crime. This would also incentivize further immigration problems. As other programs with good intentions, this would quickly spiral out of control. Approximately $1.7 trillion dollars of our deficit is spent on Medicare/Medicaid.
That is more than a third of the total revenue of the United States. I do not see how UBI or GBI would benefit anyone other than those unwilling to work.
There are two books I would recommend people read. The first is Understanding Capitalism: Competition, Command, and Change by Martin Wolf, and the second The Crisis of Democratic Capitalism by Bowles. Both go into detail the problems we are facing. The first book was a text book one of my kids had for their economics course. I decided to read it out of curiosity. It changed my view on several key issues.
Futhermore, the UBI experiment in Finland failed. Every notable economist agreed, Finland's own report showed it was a failure. They noted not only the economic failure, but also the social failure, with their populous overwhelmingly feeling there was an unfairness in the system.
Let me tell you how Medicaid/Medicare is being abused. You might find I'm cruel, or I don't love my mother. But here are the facts. My mother went on Medicare in 2007. She had two different cancers. Medicare picked up the tab up for both. Treatment for each one was well over $1 million dollars. She then had both knees replaced, both hips replaced for a total of almost $450,000.
Then COVID came. She refused to get vaccinated. She was placed in ICU for 60 days on a ventilator. Furthermore, she had a heart attack, and her stomach ruptured while on the ventilator. How she survived is beyond me. The total bill picked up by medicare was well over a million. She viewed it as her right. She is a Woodstock hippie, everything had to be natural, and kept those beliefs until she was old enough to get on Medicare.
I don't think we understand what we're doing when we allow this kind of gross spending and how it works in our political system. For me, if I require millions of dollars to keep me alive, let me die. I don't want those costs passed onto my children and the next generation. If I'm so poor I need UBI, I would hope, I would do something not to cause others to be inconvenienced and work.
Be careful of the government programs you want. The people you think won't abuse them, will absolutely abuse them. I feel UBI would be disastrous, but would be abused and further corruption in our country.
The real problem here is that we expect an individual to operate on the same footing as a firm. The firm can use its army of people to devise new ways to bamboozle the individual, but the individual has only their wits and their free time to use to defend themselves. The only way to protect yourself as an individual is collective action.
If you believe in science, you have to also believe that the free market is working. Instead of getting worked up by online talking points spewed by your fellow Bernie Bros, you should look at some stats about the wealth creation and quality-of-life stats over the past 200yrs, 50yrs, 20yrs, etc.
The issue with UBI is that enacting it at scale has two huge problems:
1. Financing it. These programs are monumentally expensive. You need to get the money from somewhere. The easiest place to take it is via the money printer and the second is from the rich.
If you do it via the money printer, it's a self-own in terms of inflationary impact.
If you do it by taxing the rich, you wind up hobbling and punishing your most productive citizens. Look at China's economic situation right now to see how ultimately unproductive that can be.
2. Diminishing effects. A bit more money is great when everybody else in your local economy didn't get it. But when everybody gets it, things just become more expensive.
The USA did this during the COVID era. We basically implemented UBI. We expanded the M1 money supply from $4T to $18T and largely handed it out in a diffuse way. For the first 6 months it was awesome. And then shortages started spiking and inflation started creeping in. We ultimately had to roll it back.
I don't think these problems are fundamentally solvable.
Instead, we should foster competition, incentivize innovation, and let markets do their thing. This will create lower prices for basic goods and create employment opportunities so people can have what they need for cheap, under the financing of their own effort.