It's a test. Here's what the article says about the motivations behind this test:
>> Now, the Finnish government is exploring how to change that calculus, initiating an experiment in a form of social welfare: universal basic income. Early next year, the government plans to randomly select roughly 2,000 unemployed people — from white-collar coders to blue-collar construction workers. It will give them benefits automatically, absent bureaucratic hassle and minus penalties for amassing extra income.
>> The government is eager to see what happens next. Will more people pursue jobs or start businesses? How many will stop working and squander their money on vodka? Will those liberated from the time-sucking entanglements of the unemployment system use their freedom to gain education, setting themselves up for promising new careers? These areas of inquiry extend beyond economic policy, into the realm of human nature.
Basically, no one knows how humans/societies will react to such a hand-out, and this is trying to figure out if an eventual universal income will be effective.
Also, this quote from later in the article:
>> Mr. Saloranta has his eyes on a former Nokia employee who is masterly at developing prototypes. He only needs him part time. He could pay 2,000 euros a month (about $2,090). Yet this potential hire is bringing home more than that via his unemployment benefits.
>> “It’s more profitable for him to just wait at home for some ideal job,” Mr. Saloranta complains.
>> Basic income would fix this, he says: “It would activate many more unemployed people.”
So UBI is fundamentally a safety-net; insurance, if you will.
The "universal" quality is that all people will be eligible for UBI. Everyone will receive the difference between what they make and what UBI guarantees.
It's sort of like the popular phrase in the U.S. - "everyone is guaranteed the same opportunity but not the same outcome". Thus, while all will have access to UBI, the payout will be determined by individual circumstances.
Regarding Finland's program, it's likely they had to choose a group of individuals who were easiest to justify paying UBI under current popular-thought. Therefore, they chose a group already receiving or eligible for unemployment/assistance and argued they were simply replacing one for the other. That is of course just an educated guess on my part.
So, yes, UBI itself is in fact universal although the initial rollout, or test, is highly compartmentalized.
Edit: As someone pointed out, I'm probably confusing UBI with GMI - Guaranteed Minimum Income.
It's starting to feel like we're discussing rules on laying a foundation while others are already fast at work on their fourth and fifth floor, i/e, what's the point of giving everyone a ladder if the roof is consistently growing out of reach?
> Everyone will receive the difference between what they make and what UBI guarantees.
This isn't UBI either.
UBI would simply give everyone the same income without subtracting the difference for extra earned income. You could earn millions and still receive your basic income.
I think all non-business deductions should go away and turn them into fixed credits (vanishing most of them entirely). Right now two homeowners each with $1000 in deductible mortgage interest, have different tax liability reductions if they're at different tax brackets. The one in the higher bracket actually ends up with a greater reduction in tax for the same deduction. And so on.
I define UBI as having a floor on people's income, where the government ensures everyone is above that floor. So it's universally ensuring everyone had a basic income.
You're right, I'm thinking of GMI - Guaranteed Minimum Income - as I've seen the two spoken of interchangeably while that doesn't seem to be the case.
My fear when comparing the two would be that UBI would, over an extended period of time, put us right back where we started. I say this because UBI would essentially just be moving the starting point, $0/mo in this case, to say $2,000/mo, and that markets would eventually catch up to this resulting in hyper-inflation, i/e $25 gallons of milk.
However, since as wikipedia says, "most modern countries have some form of GMI", either I'm being too optimistic about GMI or too pessimistic about UBI. Then again, perhaps the issue evolves into one on taxation, loopholes, etc. since GMI exists and we're still discussing how to "fix" this issue.
Finland is going to selecting 2,000 unemployed individuals, at random, and offering them cash without strings. Current unemployment schemes, they believe, hold back individuals from finding part time work / any work because the benefits outweigh the job opportunities. They hope that this new scheme promotes people to take work and have an adequate safety net to prevent homelessness and hunger.
They could simply do this (i.e. welfare without limits on working) on a small scale as a 'test' which would be considerably less expensive than BUI test on a limited scale.
I wonder why the participants couldn't be chosen from the whole working-age pool. Unless, the final system is not meant for working people at all, going against everything the universal welfare meant to solve. Doesn't surprise me one bit.
Jobless people generally cannot earn additional income while collecting unemployment benefits or they risk losing that assistance.
Worst. Idea. Ever.
I know -- it's a common feature of income support systems, including here in the US.
I don't know whether UBI is going to prove workable or not. But even if it doesn't, if we could just redesign the systems we do have so they never give recipients a disincentive to work more, that would be a huge, huge improvement.
Means-tested programs are the epitome of wasteful government bureaucracy. It's never the right way to "compromise". If we can't sell straight UBI, then something like universal food stamps would be a good first step:
I am reminded of an article I read years ago (sorry, no reference) about a low income family in Chicago (I think) during the Reagan era. The family had saved up a bit of money to send their kid to college, but some bureaucratic org found out. It was responsible for handling their benefits and because the total amount of assets the family had was over an acceptable limit, they cut out _all_ benefits to the family. Till the bank account went down to acceptable levels.
Way to go towards helping people help themselves, encouraging middle class values, responsibility, yadda yadda, all the usual stuff Republicans blather about but don't actually care about.
I remember that story and it might have been during the first Clinton campaign in the 90s or anyway one of those "Welfare Queen" stories meant to make public assistance seem like a shorthand for "laziness". There are asset tests for assistance and you can see them broken down state by state here: http://scorecard.assetsandopportunity.org/latest/measure/ass...
Explain to me why my tax dollars should pay for other people again? I am not sure I understand why my labor must pay for others against my wishes. If I want to donate to charity, I will.
Taxes should be used to pay for shared resources (roads, police, military,) but paying other people's living expenses? No thanks. America has poor and unemployed, yet Democrats seem to have no problem with illegal immigration which reduces the ability for those poor and unemployed to gets jobs.
In addition to not having an unstable society with high crime:
1. Poor people on welfare wouldn't be dis-incentivized to work more.
2. It reduces the cost of those programs like welfare that cost a lot in bureaucracy for no gain.
3. Lower income people have money velocity that stimulates the rest of the economy.
> Democrats seem to have no problem with illegal immigration which reduces the ability for those poor and unemployed to gets jobs
Illegal immigration doesn't do that... automation is a big factor in that. If your job is being taken away by an uneducated illegal immigrant then you are not competing for highly paid jobs.
> If I want to donate to charity, I will.
Charity has been shown to be less efficient than just giving money directly to poor people.
> Charity has been shown to be less efficient than just giving money directly to poor people.
Can you provide sources for this? Also, what do you mean "efficient"? If you mean there's no overhead, sure, so long as you don't spend any time trying to determine where the need is and just hand cash to the homeless guy you see on the street, but I care about effectiveness, and that's very likely not going to be "give money to the guy on the street near my office".
GveDirectly is better than most charities (which is mostly just giving money to poor people, but is a charity that does it intelligently). Additionally, the Against Malaria Foundation probably has a higher effectiveness.
The problem with depending 100% on people giving to charity is not that it's worse than depending on them giving money to the poor. It's that it completely ignores the various externalities that can be corrected through taxes and government spending. Would the world be better off if we cut government spending in half and send that money to AMF, GiveDirectly, and similar programs? Sure. But would the world be better off if we just cut government spending and hoped rich people would become more altruistic? Probably not.
GiveDirectly is precisely the model I was talking about. I don't think of that model as a traditional charity. The overhead on charities is absurd a lot of the time and there are quite a few scams out there. I have a hunch that a government based BI would be better than what we have right now. Though, to make that happen we would need universal health care for all and eliminate all the social safety nets other than BI and health care.
Do you hold any insurance policies, like on a home or a car? It's roughly the same thing. You pay into a system, and you may never have to use it, but you'll be glad it's there if you ever do need it.
I'm not American, but do Dems really have no issue with illegal immigration? That seems like a slightly skewed perspective.
To answer your real point. You can never have full employment. There are always going to be people that can't have a job, whether that's due to health, lack of job availability, or a number of other issues. What do you do with these people? They have to eat or die.
The current system design is to provide a a safety net. The alternative is that people resort to crime to survive. Do you think that'd be a better country to live in? Do you have an alternative system?
> do Dems really have no issue with illegal immigration
>How many people have been deported under Obama?
>President Barack Obama has often been referred to by immigration groups as the "Deporter in Chief."
>Between 2009 and 2015 his administration has removed more than 2.5 million people through immigration orders, which doesn’t include the number of people who "self-deported" or were turned away and/or returned to their home country at the border by U.S. Customs and Border Protection (CBP).
>How does he compare to other presidents?
>According to governmental data, the Obama administration has deported more people than any other president's administration in history.
>In fact, they have deported more than the sum of all the presidents of the 20th century.
>which doesn’t include the number of people who "self-deported"
But if you did include the number of people who "self-deported" then you'd find that the total number is not that great under Obama and in fact is lowest since 1970s.
Now, I don't know what these two numbers from DHS reports actually mean and the DHS does not tell me, but I find it peculiar that the number of "returns" under Obama decreased 10-fold, while the number of "removals" doubled. More peculiar that the "returns" had been pretty stable for the past 30 years too, the 2014's 162K returns only had been seen in 1968 before.
There is no such thing as "self-deportation" in the statistics. There are just "removals" and "returns". All the DHS tells is that one is through force (presumably a court decision) and another is not. If someone is turned at the border without a court decision, is it a "self-deportaiton", "removal" or "return"? My guess it's a "return" in these stats.
> Until recent years, most people caught illegally crossing the southern border were simply bused back into Mexico in what officials called "voluntary returns," but which critics derisively termed "catch and release." Those removals, which during the 1990s reached more 1 million a year, were not counted in Immigration and Customs Enforcement's deportation statistics.
>Now, the vast majority of border crossers who are apprehended get fingerprinted and formally deported.
>Expulsions of people who are settled and working in the United States have fallen steadily since his first year in office, and are down more than 40% since 2009.
Exactly. And there is nothing stopping a group of people right now from forming up and, enforced by contract, giving basic income to all members by taxing those that make money.
If it were such a great idea for a country, it would have already occurred at a smaller level.
> If it were such a great idea for a country, it would have already occurred at a smaller level.
It has. The Svanholm community in Denmark (http://svanholm.dk) raised taxes to 80% for all its members, but in return you free housing, food and all other essentials. They have been doing this successfully since the 70's.
"It requires personal energy, commitment and desire for self-management in the community to become Svanholmer. Both people with work "out of town" and people who want to work at home on the estate can participate."
This doesn't sound like they just hand out money, and seems likely (I'm just guessing here), that if you don't work you may get kicked out.
Much of your earning power is the result of work done by others, many of whom are long since dead. If you earn a living by using a computer for any purpose, you've taken advantage of work done by Michael Faraday, George Boole, John Backus, Tim Berners-Lee, and others too numerous to mention. Even if you didn't use one, you still benefit from being able to read and write, for example.
So some of your earning power really belongs to the community, and should be divided equally among the community, including yourself.
It doesn't logically follow that because we use the inventions of others, that anyone who decides to sit on a couch all day, and stick their hand out is deserving of money of those that choose to work.
Modern day liberalism has become a religion, where "what should happen" and what's "morally right", and who has "advantage over others" replaces "God's commandments", "sin", and even in the case of affirmative action, "original sin" (being a white male, you are born having others more deserving than you).
And just like any other religion, it's all just a bunch of horse shit.
> Democrats seem to have no problem with illegal immigration which reduces the ability for those poor and unemployed to gets jobs
I'm pretty sure all the business owners who take advantage of illegal immigrants to violate labor laws, pay them pennies compared to what they'd have to pay those 'poor and unemployed' Americans, and generally abuse the heck out them... --all-- vote Republican.
If Trump actually builds a wall that works, a bunch of scummy Republican business owners are going to be screaming bloody murder. Illegal immigration is a problem, but there is a demand side to it and no one ever seems to bring that side up in discussions.
Also a huge problem is that you get this living support based on your income, and it has no proper upper bounds. One could receive hundreds if not a thousand euro in extra support if they chose to live in a costly neighborhood (namely, central Helsinki). Even more of a disincentivizing factor to consider here.
It used to be even more weird. About 20 years ago, when our kids were small, I was simultaneously in two groups:
1) High income: My personal gross income was among the top 20 % of earners. Thus, high taxes.
2) Poverty: My family's net income after housing expenses was below the threshold of the last-resort income support.
All it took was having three small children, wife not working as the youngest was a newborn thus only the minimal maternity allowance, Helsinki region housing costs and the progressive taxation of "high earners".
The way to get out of it was to take a job abroad for a while. But Finland is my home, even if I hate some parts of the welfare state politics, so I came back.
I'm not necessarily opposed to means-testing; for example, progressive income tax rates can be seen as a form of means-testing, and I think they're a good thing.
What I care about is that the function from income earned to income (including subsidy) received be monotonic. Again, the income tax system (at least in the US) is carefully designed to have this property: when you make enough more money to move into a higher tax bracket, that higher rate is applied only to the amount of your income in excess of the lower bound at which that bracket applies. So the total amount of tax never jumps discontinuously, even though the marginal rate increases. Even though you keep less of your next dollar of earnings the more you make, there's never a point at which earning the next dollar will leave you with less money after tax.
The same should be true even if you're receiving a subsidy. That's all I'm saying.
The combination of a fixed-amount UBI and a fixed-rate tax does exactly what people want. The marginal tax rate is completely unwavering for everyone and the effective tax rate ((tax paid - UBI)/income)) follows a nice continuous progressive curve.
> Even though you keep less of your next dollar of earnings the more you make, there's never a point at which earning the next dollar will leave you with less money after tax.
The problem is that's not the only thing you want. You also don't want marginal rates of 75%+ for low and middle income people. It's not only that taking a $20K/year job shouldn't cost you $21K/year in benefits, it's that it shouldn't cost you $15K/year in benefits while you now incur more transportation and childcare expenses.
A fixed amount UBI and a fixed rate tax doesn't do exactly what people want, because it is a huge tax break at the top, and a huge tax increase in the middle if we want to be revenue neutral: The shape of the curve is very different from the current one, and there would be huge winners and losers. Nothing short of a 50% fixed rate will not be a huge tax break for us in the 1%.
I don't know about you, but I don't think that the problem in the US system is that a family with two senior developers pays too many taxes.
Therefore, on top of a UBI, the only thing that doesn't screw the middle class over is to maintain a progressive tax rate.
> Nothing short of a 50% fixed rate will not be a huge tax break for us in the 1%.
The current highest bracket in the US is 39.6%, which doesn't come into play until you've made more than $400K. The vast majority of "middle class" people pay 28% marginal rates or less -- anyone up to $190K for single or $231K for married filing jointly.
A household making $200K currently pays an effective tax rate of ~22% -- and that's $200K after all the deductions. To meet the same effective tax rate with a flat tax against a $12K/year UBI would require a flat tax rate of 28%.
Moreover, to be in "the 1%" you need household income in excess of $400K.
And most of the actual 1% pay the long-term capital gains rate, currently up to 20%, whereas with a 28% flat tax they would be paying 25 to 28%.
That's still a disincentive: my effectively hourly rate decreases the more hours I work. Not sure how that's fair. A flat tax is the only fair tax. You make more, you pay more, but you aren't taking an effective pay cut per hour based on simply working more.
Most flat taxes do not land in the "you make more, you pay more" scheme. Instead, they are in the "you spend more, you pay more." Which, doesn't sound bad, necessarily.
However, there are two problems that I see. I suspect there are more.
First is that what you spend is only related to what you make. Specifically, it is relatively easy to find ways to not spend money if you have extra. What this means is that, at an absolute level of what you make, a flat tax actually gives a very easy way for high income people to have a lower tax rate. Turning it into "the more you make, the more you can proportionally keep." Which is sorta antithetical to the idea of the flat tax.
The second problem is essentially the cold start problem. Society is expensive to keep going. There is not much of a way around that. So, the rate will have to be relatively high to get the necessary funds. And this will hit those with low incomes harder than the ones with high.
I don't think either of these are necessarily road blocks to the idea. But, I do think it will necessarily get complicated.
'Most flat taxes do not land in the "you make more, you pay more" scheme':
I think you are missing the point. If it is truly a flat tax, the number of dollars you are taxed goes up (in a directly proportional way to the number of dollars you make). So you DO pay more the more you make. It isn't even a logically arguable point.
"a flat tax actually gives a very easy way for high income people to have a lower tax rate.":
-- again that's a completely illogical statement. If it is truly a flat tax *EVERYONE* has the same rate -- that's the very definition of a flat tax.
The entire first point is on the assumption that you are pushing the flat sales tax that is very common. Is anyone pushing for a flat income tax?
If so, apologies. It is still easier for the wealthy to dodge. But not as easy. (Main way I can think of is that at that level you can often live off the company. I don't think this happens enough to care about. Could be wrong.)
This still doesn't address the cold start problem. If a region needs X dollars and that requires Y rate, how do you ensure that doesn't drown out the poor?
And again, I'm not pushing these problems as show stoppers. Just things that contribute to a complicated solution.
Except no one gets to higher rate tax by working more hours. They get there by working approximately the same hours and being paid more for them. So they're not "taking a pay cut per hour", they're just not getting as much benefit from raising their rates as they would otherwise.
No one is going to refuse a salary bump because it will increase their marginal tax rate.
If you made $32.05 dollars per hour for 30 hours a week (50K a year) and paid 10% tax on those dollars, you would earn an effective after tax hourly rate of $28.84. If all dollars earned after 50K were then taxed at 15%, your effective after tax hourly rate for working more than 30 hours would be $27.24. A one dollar and six cent reduction. I believe the purpose of time and a half overtime is partly to correct this problem.
A couple years ago I worked with someone who, if he worked too many overtime hours (which came around from time to time), would get into the next tax bracket and it wouldn't be worth it. Not sure how much he got paid or how many overtime hours were required for that to happen, though.
> if he worked too many overtime hours (which came around from time to time), would get into the next tax bracket and it wouldn't be worth it
By "not worth it", I suppose you mean that he valued the marginal increase in income less than the marginal decrease in free time – which is entirely subjective and different from person to person? I don't see your point.
In the higher tax bracket, he didn't work enough overtime to offset the increased taxes and ended up with a smaller check than if he worked less. At least that's what he claimed.
Progressive taxation is more fair from the standpoint of society at large. You're being myopic in only considering it from your point of view. How is it "fair" to force someone who is barely making ends meet and struggles to sometimes put food on the table to pay the same exact tax rate as someone who is rich, and whose biggest economic struggle is wondering whether to upgrade to a bigger yacht this year or next year? That extra $1,000 you'd be forcing the poor person to pay in tax would feed their kid for a year, but the rich guy doesn't even notice paying that much extra. Money does not have constant utility across all people. Maximizing the total utility across society -- now that's fair.
Not directly, but usually their labour is generating the value that produces the income that gets transferred to the rich person (eg via return on capital) allowing the payment for luxuries and the taxes on them (though more usually, it seems, the costs of avoiding said taxes).
Is that a joke? None of those are even real taxes. Sure, you pay sales tax on a yacht, but the poor person is paying the exact same percentage on their everyday items. That's regressive.
Also, don't you see how callous it is to worry about how a rich person has to pay country club dues, in the context of talking about poor people who struggle to afford food sometimes? Why would your sympathies lie with the person who has all of their basic needs met and is "struggling" only to utilize as many luxury goods (yachts, country clubs, sports cars, box seats) as possible?
Is there any data backing up the idea that it actually is a disincentive?
1. Anyone I know that has received benefits for being unemployed desperately wants to be employed again.
2. In the UK, unless things have changed, you can work up to 16 hours per week while receiving unemployment benefits and I believe the benefits you receive gradually falls with the amount of work you get paid for.
3. If you suddenly lose your job benefits aren't built so that you can maintain your current life style. You likely have car, insurance, and mortgage payments to make and the benefits you're receiving either just get you by or you have to renegotiate some of that debt. Not a situation you want to be in long-term.
I mean, if I was offered half of my current salary (which is, admittedly high, as a software engineer) for free under the condition that I don't work, I'd totally take that deal.
Uhh I think to get unemployment you have to be laid off (fired through no fault of your own). I'm not sure how you think he's getting paid 1/2 his current salary if he's fired, that sounds like $0.
Not true. If you get fired for not attending your job, you don't get unemployment. If you get fired for performance reasons, you get unemployment. My father got fired for "insubordination" aka his manager not liking him. He still got unemployment.
It's up to half of your previous salary capped up to a certain amount. I actually don't know if my father got half of what he used to earn, but some people that worked for a long time before getting fired or laid off do get half.
> 1. Anyone I know that has received benefits for being unemployed desperately wants to be employed again.
My father makes so much money that when he's unemployed he actually doesn't really look for a job that urgently. This is because his unemployment benefits are enough for him to pay the bills. He'd like to make money to retire... but he does rest for a few months in between jobs.
Under the present system in the UK it really doesn't make much sense to work <=16 hour at around the lower wages. I know this from personal experience when I was unemployed (graduated uni at the worst possible time during the recession) and was offered a low paying job that was only 16 hours. I had to turn it down because it would mean I would have less money once I factored in travel costs because the benefits got withdrawn at a 1:1 ratio (in some cases it got withdrawn faster than my earned income grew), and I was barely getting by as it was. I was unemployed for another 3 months (6 in total) before I got near full-time hours offered to me. I was miserable for the entirety of my unemployment - there is nothing cushy about it.
This bug/feature in the welfare system is actually a major motivation behind the UK government's long beleaguered universal credit system, which is meant to support this kind of part-time work. The idea being that a worker should never ever be penalised by the benefits system for working, but should always earn significantly more in work than out of work and working more hours should always result in a net increase in income.
They are trying to do this by unifying almost all benefits (unemployment, disability, housing, child benefits, etc...) under a single administrative umbrella, and then only reduce the net benefit by £0.66 for each £1 earned through work. Its been delayed significantly because it requires a major IT overhaul, and that project has so far been a £1-2 billion black-hole of incompetence by a series of IT consultancies that have all failed to deliver the system needed to merge all these complicated means tested processes together.
1. Anyone I know that has received benefits for being unemployed desperately wants to be employed again.
How wide is your social network (by this I mean people you actually know and see)? How diverse is it? My experience, living in the Rust Belt in the US, just north of Appalachia, is that many people are more than happy to live on the dole for as long as possible. I chalk some of this up to laziness, and some of it up to the lack of reasonable work.
3. If you suddenly lose your job benefits aren't built so that you can maintain your current life style. You likely have car, insurance, and mortgage payments to make and the benefits you're receiving either just get you by or you have to renegotiate some of that debt. Not a situation you want to be in long-term.
Again, my sense is that your observations are true for some given demographic, but are probably not entirely accurate for people who are truly living at or near the poverty line. Those people may have been working, even steadily, but they probably didn't have a home, and may not have even owned a car.
You are right, of course, that if I lost my job (as a software developer), I'd be okay for three to four months without benefits, but it would be hard to maintain a home and a vehicle after that. That likely goes for many on HN. But we generally aren't the demographic best served by unemployment benefits.
Unfortunately it's quite common due to the layered nature of unemployment benefits in the UK to be far better off on benefits than to go into work. I know several people who work the bare minimum to qualify for all their benefits then proceed to claim them for as long as possible. One example being if you have several children, working can easily reduce your child-tax credits by an amount greater than your employment income.
The counter-argument of course is that you shouldn't have children if you can't afford to raise them, but the disincentives are there, and as crazy as it sounds people are incentivised to have a lot of children as a method of escaping work.
my poor cousin got his disability slashed when he tried to work part time as a cashier just to get off his ass and be part of society. For many (bit not all), working at something is preferable bc it helps them feel responsible and social and to have a purpose. Just because he was half-blind, he didn't want to be stuck on the sidelines.
Oh, for sure. I think that is one of the most frustrating things about it. Those who receive e.g. disability benefits but _want_ to contribute are penalised for their efforts whilst simultaneously they can see those who don't contribute and simply play the system.
It might be some implicit bias that I have, but I read that as minus, or without, penalties for amassing extra income. As in there are no penalties for amassing extra income. There is a double negative in there. I'm trying to find a more authoritative source on whether this is the case
Would it be possible to do a modified system where they instead of losing the universal income unemployment benefits. There could be a system where the benefits are lowered in proportion to the income earned from jobs, that allows for those who are able to and want to work but are only able to find low paying jobs to have benefits that do not discourage them from doing work.
Does that have any negatives that basic income doesn't? To me it sounds like a direct subset of that UBI aims to achieve. So a solid stepping stone towards it.
I support a prorated version, but the common criticism is that it's more open to fraud and harder to implement. I still think a prorated[1], guaranteed minimum income is better than a basic income.
1) something like reducing that payment by $0.50 per $1 earned as an example.
It's just an unnecessary wrinkle. Taxing earned income is the same as doing what you propose, but incurs higher coordination costs. Also, using your example, it's regressive taxation unless the base rate is higher than 50%.
I don't think paying everyone is a good idea and will encourage inflation to make the program useless. I'm fine with regressive when talking money given to you.
It still requires a level of means testing. People might hide sources of income in order to get more payments. On the other hand, since you aren't handing a check in the same amount to every person in the country, it wouldn't require as high an income tax rate to sustain.
Basic Income and Negative Income Tax are an in fact equivalent, in that you can achieve identical income functions with either just by choosing the right tax bands.
However, their framing leads to different expectations. For example consider a flat income tax of 25% on income less $20k (going negative below that so unemployed people get $5k credit). Raising the negative rate to 50% sounds kind of progressive, since you're giving more to poorer people, but frame it as Basic Income, and yes you're increasing the baseline from $5k to $10k, but you're also implementing a 50% regressive tax band up to $20k earned income.
Another point is that they'll tend to be implemented differently due to framing. Basic Income is likely to be part of the welfare system, and since it's unconditional, you can just register once and receive it in perpetuity. Negative Income Tax is likely part of the tax system, so to get it you potentially need to submit a tax return saying "Earnings: $0" every year, which makes it more embarrassing.
> There could be a system where the benefits are lowered in proportion to the income earned from jobs
The thing you are referring to is called taxes. The more money you make the more taxes you pay and there comes a point that you're paying more in taxes than the amount of the basic income.
Phase outs are a pure scam. Their purpose is to conceal imposing higher marginal rates on low and middle income people so that higher income people can pay lower rates.
The worst part of the unemployment benefit in Finland is not even the losing assistance if you take some job for a time. In the long run the payment will even out at least a little bit. It's the short run cash flow problem that really stops people from taking a job, as the jobseeker's allowance is cut immediately upon the employment office learning of someone having a job.
It's already a problem that the benefits are such that net income from an actual job may be negative. But even with that, people might take a temporary job to get the experience. But they cannot afford it, because getting a job cuts the benefit payment instantly, and they can't afford to wait the time that it takes the bureaucracy to resume payments.
yeah its a little bit counter intuitive, I would think that it would not be financially stable to have the entire income of a population given to them. Rather it could be a lesser amount of money that would assist, rather than replace their current income.
I'm interested in hearing why it's a bad thing to disincentivize working more. Is it so bad for someone to not be working should they have enough money to live on? (I'm not sure if the benefits in this specific case are enough to live on, but I guess I'm thinking about the general principle.)
People working X hours a week are guaranteed to be spending those X hours producing something useful to society, or at least to their employer. People not working are not.
Sure, some people who are not employed may be raising children or volunteering or doing something else beneficial to society,and encouraging them to work instead would be society's loss. But if we trust in the market economy, those people don't exist, and our real loss is people who are unproductive while on welfare who would be productive given a minimum wage job.
They don't even have to be raising children or volunteering to benefit society. As long as they spend the money that's given to them, the market benefits.
Scenario 1) The government gives me $1000 and I buy $1000 dollars worth of goods and services, so now the economy is better by the net gain of $1000 worth of transactions - i.e. the mutual benefits of trade.
Scenario 2) I have a job, do my job and my employer pays me $1000 dollars. Then I spend that on $1000 worth of goods and services. Now the economy gets the benefits of $1000 worth of trade plus everything that I did for my employer, which is in excess of $1000 according to his calculation.
You compared Scenario 1 to Scenario 0 and said that Scenario 1 is a win, but the context was 1 versus 2, where it's a negative. In scenario 2, the employer could be the government paying me to improve the roads, for example, instead of the government handing me the money they would have paid me. In which case the difference is the improved roads.
Not entirely related to the original point, but I believe in the case of scenario 0 vs 1 market benefits by having more rational actors. That is, if you're not dirt poor, you're able to make better decisions and that makes markets work in a more optimal way.
What about the case where you have people whose paid job does not actually fundamentally add to any significant measurable net good? In that case, these people are also consuming the resources of the organization by taking a paycheck, taking up space, etc.
Perhaps corporate profits would not have to be so huge and prices could be lowered if the pay for work done was more closely related to the value added.
For that matter, how about all the jobs that nobody necessarily "wants" to do, are low paid, and yet critical to the functioning of societies?
Not true. The deadweight lose from taxation results in less economic benefit than not taxing and redistributing the money. Keynesian economics doesn't work. Assuming the administrative cost of taxation is non-zero, that cost means that $500 given to someone cost someone else >$500. So we spend $500 + deadweight loss to 'gain' $500 in economic gain.
So the benefit of giving that money must provide a gain greater than the deadweight cost. That gain could be non-monetary (a mom raising her kids for example) -- but just the 'spending' doesn't benefit the economy because spending $500 actually cost much more than $500.
The 'deadweight' administrative cost is itself an economic benefit - it's money paid to some administrator, who will thus have extra money and will be able to return it to the market in turn. It just means that the $500 of benefits isn't actually $500, and doesn't just go the end recipient: it's actually $550 (or whatever) and goes to the end recipient as well as the administrators and other intermediaries who deliver the money to the end user. That extra money doesn't evaporate into the void.
Under your interpretation there is no possible way taxation, waste, or even fraud is ever a losing proposition. You fall into one of those holes Keynes said you could dig and fill up to help the economy.
Unfortunately taxation itself reduces the incentive to produce and distorts the economy, and the Broken Window Fallacy is still a fallacy.
Taxation doesn't distort the economy. This is such a nonsense statement that it's difficult to say it's even "wrong" -- it's simply meaningless. Taxation and the fundamental ability of the sovereign to create demand for its money tokens is the very basis of any modern, capitalized economy. There is a strong argument to be made that taxes drive money and make economic exchange possible [1].
(BTW, Hacker News is simply terrible at discussing economics. This comment is hardly unique.)
> Broken Window Fallacy
The entire thread and discussion is a bit off-putting but it's worth noting that the question is, as always, what to do about unproductive assets. Nobody is advocating that healthy, able-bodied people should all receive free money from the government. That's why the Broken Window Fallacy is stupid. It's a fallacy against a straw man.
And yes, when it comes to unproductive assets there's good reason to believe that the government should step in and act as the "producer of last of resort." There's always work to be done. The government is never going to run out of money. And, in reality, you're going to end up giving these people money anyways (unless you want to see women and children starving the streets) so you might as well try to see some returns. I've never been a fan of basic income but a Job Guarantee[2] makes perfect sense. Finland would be far better off putting these people to work for the government. Basic income in this form (giving people free money while encouraging them to go to work for private producers) can, ironically, depress wages, unfairly subsidize badly managed firms, and ultimately hurt the economy. Unfortunately westerners are terrified by the spectre of communism so you don't get this sort of large scale public production any more.
>the question is, as always, what to do about unproductive assets.
If we consider the goal of society to be increasing overall utility, then someone enjoying their free time is not unproductive because they are producing utility (for themselves). There may be more productive things they could be doing, but we shouldn't ignore that baseline. If the work offered by a Job Guarantee scheme is not producing as much utility for society, then it would be more efficient to just give them the money.
I'm curious if UBI could have this effect long term. One possibility could be that as people have reduced existential pressures they begin to explore the things that actually interest them and reduce the activities they do to solely generate income. This could have two positive effects. The first is an explosion of long tail creativity and innovation. The second, a correlation of sorts, could be that people reduce their society (environment etc) harming but income generating activities.
Anecdotally, it was definitely a bad thing for me. I was laid off of a software dev job at the beginning of the summer in SoCal. I would have loved to have spent that time working as a bartender, for the local bike share program, or as a lifeguard. These were all positions I could leave after the summer (3 months), inevitably returning to a higher paying software development job without causing any harm to my employer. But by actually working, I would earn about half of what I received in UI benefits.
Since I was looking for an advancement in my career (I left the company on good terms and my former boss ended up being one of my references) and not desperately looking for anything that pays, I ended up doing a lot of volunteer work while focused on increasing my skill set a bit and looking for the right opportunity. But I could have just as easily spent that time sitting on my ass.
If you are not unemployed, why would you receive unemployment benefits?
The problem with this particular restriction is jobs that don't pay sufficiently, have wildly varying hours or are pretend part-time to stay under some benefits threshold. The solution can not be subsidize exploitative employers who don't provide a livable wage through UB. These jobs are a net cost to society and plain should not exist.
Important to note too is that in Sweden, and likely other scandinavian countries, you can find a part time job and get part time unecmployment benefits.
As long as it's within the law, on paper. If you're taking undocumented work then you're also taking a risk where you might lose your benefits if found out.
I think maybe there is a larger chance for undocumented work in countries like the US. I have an impression that there is a more prevalent culture of cash-in-hand jobs due to the sheer size of the country.
So maybe you react more to the quote than I would because I've always had documented work, whether it was 25%, 50% or 80% it was always documented and known to the government what I was doing so I could always apply for the necessary benefits I was eligible for.
I know that at least some municipalities in Sweden allows for earnings equal to ~25% of the social welfare payment, before it's reduced. So you can earn about $250 extra per month and get to keep it, instead of being stuck with the same income.
Cheap way to provide extra incentive for people to actually get out and work. Even if it's only for a few hours a week.
Negative income tax (more emphasis) + basic income (less emphasis) would be a better system. A negative income tax would encourage people to work. Basic income by itself may just remove some barriers to working but may not result in a change (basic income > costs).
I'm positive that this answer won't be appetizing if you belong to the dyed in the wool, coastal progressive contingent, heavily represented here on HN.
Given the recent political developments (not just here in the U.S. but across the world including Europe), it is high time we speak frankly and not say things couched in vain pleasantries, suited to people who'd rather not hear or say anything disagreeable, to keep up appearances.
Having said that, if you want the honest truth as to why _some_ people may have an objection I'm willing to explain.
People who are unlucky to be earning just enough to be excluded in one way or the other, from these UBI handouts ( which already happen in disguised means and forms, but more on that later [1] ) but not enough - from their wages & other sources of income - to be living a comfortable life will find themselves asking how is it that suddenly
a) their kids cannot get into those choice daycare centers which weren't so crammed only a few years ago
b) the economy classes on most flights are filled with the riffraff & people from outside of the income/social
classes they're accustomed to
c) their favorite restaurants are always booked or have lines out the door ( a perennial theme in SF ) [2]
d) the rent pressure is greater for a smaller inventory of listings in the desirable neighborhoods
e) their friends cannot afford to socialize as frequently as they once did ( or worse, have moved to a different part of the
country simply because it is no longer affordable to remain ) due to the same wage pressures
In other words people are mostly fine with any entitlements to the poor & disadvantaged as long as it doesn't threaten their way of life or become a competitive element to the comforts & privileges they are accustomed to.
Once those things are threatened people find it difficult to accommodate those things, even if it makes numerical sense - as in say an universal extra $10,000 bump to _absolutely everyone_ regardless of income class ( if that is what they even _mean_ when they say UBI; I doubt it is ) might only mean that Person X can send his kids to a much more exclusive summer camp every year but now that same bump in income means more crowded classrooms for the same kids during the rest of the year because Person Y can now afford to send his or her kids to the school for privileged kids.
More directly - and less politely - people don't want a handout-receiver ( and how you define that term depends on your political slant and can mean anyone from a lowly UBI claimant to a loftily paid city worker in any large progressive city[2] ) suddenly being able to afford the same niceties of life that they see themselves slaving at their 9-to-5s for.
Economists and policy makers can couch it in clever speak but it really is that simple.
>People who are unlucky to be earning just enough to be excluded in one way or the other, from these UBI handouts
Universal Basic Income means there are no such people, by definition.
>as in say an universal extra $10,000 bump to _absolutely everyone_ regardless of income class ( if that is what they even _mean_ when they say UBI; I doubt it is )
Yes it is. That is the definition of UBI.
>a) their kids cannot get into those choice daycare centers which weren't so crammed only a few years ago
>c) their favorite restaurants are always booked or have lines out the door ( a perennial theme in SF ) [2]
Your reference contradicts your point. It says SF has more restaurants per household than elsewhere, so one would assume they are much less crowded on average.
Moreover, if services start to become crowded as a result of increased demand, then new ones will open to cater to that demand.
> d) the rent pressure is greater for a smaller inventory of listings in the desirable neighborhoods
There's plenty of affordable desirable housing available, the problem is that it's nowhere near the jobs people need to pay for it. If you pay people Basic Income, they can afford to move out of the expensive cities which in turn reduces demand for housing within them.
The rest of the world is perfectly happy with universal healthcare, strong social safety nets, and "handouts" to children.
How do you think Brexit was sold to the British? Do you realize that the Brexiters (and all the European nativists) have been selling their agenda primarily on the basis that it would mean more handouts?
America is different. And we all know what that difference is. Americans are very much unique in rejecting basic social guarantees out of the fear that the "wrong people" will benefit.
I don't think that this is due to "fear that the 'wrong people' will benefit". I think the fear is that such programs will sap our will to improve. We fear becoming European. We fear becoming docile wards of the state. Keep in mind that everyone in the US descends from people that decided that the risk of exposure, wolves and bears was more tolerable than staying with their peers.
We now stand at a crossroads unseen by past humanity: unnecessary man. How do we deal with the fact that a portion of our population, perhaps even half, is quickly becoming a millstone about society's neck? Ideas like UBI are our first attempt to deal humanly. Soon we'll probably add to UBI voluntary sterilization or other population controls. How will we collectively in the West solve this? Burdening our State coffers by maintaining useless populations might not be the best thing.
>In other words people are mostly fine with any entitlements to the poor & disadvantaged as long as it doesn't threaten their way of life or become a competitive element to the comforts & privileges they are accustomed to.
Threats to people's "way of life" is the central idea to your post, which I think is a great springboard for specifically cultural issues that surround UBI. At the very least, cultural inertia is a real barrier to this kind of policy, even if we grant it status of being strictly better economics. The article also fixates on the "people will become lazy"-thinking as a culturally entrenched barrier, but I think your post has other real barriers that are harder to bring to discussion.
>people don't want a handout-receiver...suddenly being able to afford the same niceties of life that they see themselves slaving at their 9-to-5s for.
The "basic income" part of UBI suggests that "niceties of life" are not paid for. How austere that definition - whether it includes your examples of daycare, economy flights, and popular restaurants - is up in the air.
>universal extra $10,000 bump to _absolutely everyone_ regardless of income class ( if that is what they even _mean_ when they say UBI; I doubt it is )
I'm also deeply suspicious of how "universal" we really mean; just consider how the article's "experiment" really samples only from the "best case" of entrepreneurial, well-educated professionals (w/ families).
As for your post, an assumption is that universality w/r/t income is the only meaningful way of looking at it. For example, single and family households have very different "basic needs." Following from the "per-need" basis, reasonably, shouldn't UBI handouts be larger with more dependents? This seems to get to part of your worries, given the examples of daycare, etc. Being young and single, my assumption is that UBI is relative to single living expenses, but the article makes a point about people raising families. I doubt it's economically feasible to pay up-to family household needs for everyone - taxes and social benefits make that distinction. Are there still cultural worries w/r/t UBI that scales on dependents? What does that do to incentives and cultural perception on raising families? Maybe UBI will eliminate income-class related cultural issues that plague us this century, but it'll shift those cultural lines over other lifestyle-related boundaries (i.e. single v. married v. family)?
>People who are unlucky to be earning just enough to be excluded in one way or the other, from these UBI handouts ( which already happen in disguised means and forms, but more on that later [1] ) but not enough - from their wages & other sources of income - to be living a comfortable life will...
This is awkwardly phrased and hard to parse to me. Being excluded from UBI after some amount of income contradicts your later ideas. Also, "work" that pays that low is assumed to be at the margin where either automation eliminates it, or it's so undesirable (flipping patties) you're free to fall back on UBI living to find other undesirable work you like. That's also assuming you really don't have skills, which leads me to ask: do we consider some level of skill-acquisition a basic need and thereby include "education" costs in UBI?
>e) their friends cannot afford to socialize as frequently as they once did ( or worse, have moved to a different part of the country simply because it is no longer affordable to remain ) due to the same wage pressures
I don't know what friends you have, but society as it feels like to me already poses career-advancement choices against staying close to friends, especially those that don't work in the same field. Once you reach some level of career success, the need to maintain it naturally constrains your mobility w/r/t friendship (diversity) in some ways. Having a UBI-line only makes the "some level of career success" explicit when you make more than that line and like the lifestyle. On the other hand, wouldn't UBI let friends be patient about finding work that keeps them together? You and I may argue about the value of our friends, but certainly there are very meaningful friendships out there on the status of "threats to lifestyle" that you insist. But now we've come to a turn: originally, the article claims UBI will incentivize working over "patiently waiting," but w/r/t friendship we have a different case to consider.
Because then the rich people can't afford to buy dozens of excessively expensive cars, or own several houses, or have other people do all the menial chores for them, ...
Negative income tax would be a blatant subsidisation of labour, which has it's own issues. In another sense, it's just welfare, but a highly regressive one. More income would go to those who are poor but in work, and less to those for what ever reason (like disability) unable to work.
If you were to further lower the costs of labour, you risk stymieing actual economic growth which comes from improvements in efficiency. For instance, why use a machine when you can just hire more people?
Also what would the effect on monetary policy be? If this was funded though an income tax, would the lower savings rates of the poor, put more money in circulation, thus increasing inflation? Could you account for the change in prices driven by an increase in demand from those who's labour isn't actually valuable enough to sustain their consumption.
I don't claim to have the answers to welfare, but I really think that we should aim for a solution that provides as little market distortion as possible. I sincerely think that a negative tax would be a huge unwelcome and ineffective distortion in the labour market.
> For instance, why use a machine when you can just hire more people?
Politics could become a reason -- the people who are being replaced by machines become a powerful force, have a strong work-based ethic (different from "work ethic"), and care more about their well-being than the overall efficiency of the economy.
Either way, I'm curious to see more adoption of UBI - even if it is a small, homogeneous population. Maybe working class beneficiaries of UBI could dedicate a larger portion of their time to volunteering, or re-training.
One reason that comes to mind is that it would just allow the rich to become richer by providing a cheap workforce subsidised by the tax payer. Imagine if a company wanted to pay less than minimum wage, hire a bunch more people and have their new workers' pay topped up by a negative income tax. It'd just be getting people to work for the sake of working while tax payers subsidise profits for business owners.
> More income would go to those who are poor but in work, and less to those for what ever reason (like disability) unable to work.
Isn't that a desirable outcome ? Shouldn't the able bodied person who is working obviously earn more ? Giving people incentive to work not only helps them rise up but also prevents their exploitation in case they try going to underground economy.
> For instance, why use a machine when you can just hire more people?
If people are more efficient business will use people over machines. I don't think machines are be default always a good choice. What matters is the efficiency.
Free market capitalists who otherwise like machines and automation criticize the minimum wage laws for the same reason. Minimum wage laws force business to invest more in automation by outlawing hiring of people who could compete with machines over cost.
> Isn't that a desirable outcome ? Shouldn't the able bodied person who is working obviously earn more ? Giving people incentive to work not only helps them rise up but also prevents their exploitation in case they try going to underground economy.
This happens anyway in our current system. Someone who's disabled and unable to work already earns less than someone who's working 50 hours a week in a minimum wage job. Negative income exacerbates that.
This is only when you view income in isolation. Negative Income Tax requires the person to work, while Basic Income doesn't. Moreover Negative Income Tax could support very unproductive jobs that the economy doesn't really need.
No, NIT doesn't require people to work unless you make that a specific requirement.
For example, if you have a negative tax of 25% on income below $40k, unemployed people on $0 income will receive a $10k tax credit. This is equivalent to $10k Basic Income with a 25% tax bracket up to $40k earned income, since in both cases people earning $0 get $10k and people earning $40k get $40k.
You could make it a requirement to work, but then people could just get trivial jobs for $1 just to get the tax credit.
If there are conditions, it's not universal. The distinguishing feature of universal basic income in comparison to traditional welfare was that it doesn't have the disincentives to work caused by means testing. If you add means testing back in, you've defeated the purpose.
No. As I said previously [0], means testing is not the problem per se. The problem is a particular simplistic way of doing means testing, which is what mathematicians call a step function: below a certain income value you get 100% of the subsidy, and above it -- even very slightly above it -- you get zero. So there's a point where increasing your earned income very slightly results in a massive decrease in your total income.
It's very easy to describe and administer such a subsidy, but it has a terrible bug, which is obvious and everyone has known about it for decades, but somehow we haven't mustered the will to fix it.
That's not what UBI is about at all. UBI is about getting paid no matter what you do. Which could be doing nothing. Or it could be studying or practicing or learning a new career or even working. The fact that UBI doesn't disincentivize spending ones time in a certain way (whether that's economically productive or not) is hugely important.
This is an aspect of where there's a huge misunderstanding about UBI due to competing economic theories. There are some people, a lot of people, who believe very strongly that the economy is fundamentally coercive. And, more so, that coercive economies are natural, beneficial, and overall desirable. A lot of that thinking has certainly been baked in to a lot of conventional wisdom, culture, laws, and regulation in the economy of western countries for centuries. There are other people who believe that the economy is or at least can be fundamentally cooperative, and more importantly that a cooperative economy is more beneficial and desirable and no less natural than a coercive economy. And this is where UBI comes in, because UBI is essentially how you bootstrap a more cooperative economy. One where people work not because they are coerced to participate in toil due to the alternative being starvation and privation but instead because they enjoy the work or are fairly compensated for it and treated well.
I think this is a huge factor that isn't getting enough focus. When people's jobs are replaced by automation and they are on UBI, how do they achieve self-worth? A lot of people get their self-worth from their work, even if their job is monotonous and relatively low-skill. We may be able to replace a low-skilled worker's wages with UBI, but we can't replace their feeling of self-worth. Not everyone can become an artist and even if they could, that may not be enough to give them a sense of purpose. In the long run, this may be a much bigger question than whether or not we implement UBI.
> Jobless people generally cannot earn additional income while collecting unemployment benefits or they risk losing that assistance.
This is modern day slavery. There is nothing universal about this. It if was universal income than you must get that money irrespective of what choices you make in life. Just because you are getting money from government, government puts up a chain around your neck and says you cant work.
In USA such people might turn to underground economy such as drug peddling.
Why should we care about a disincentive to work more? It's like that trope about welfare recipients all being drug addicts. Or that taxing the rich will make them not want to work.
What motivates people to work is MASTERY, AUTONOMY and PURPOSE. This is very different from the profit motive, and is why people contribute to open source and science.
And anyway, why in the 21st century does everyone need to work? Why should wages be the primary mechanism by which living wages trickle down to the plebes?
McDonalds will soon cut its workforce. So will Uber. Thanks to automation.
If you are jealous that someone somewhere is receiving free stuff, realize how much free stuff you have just by being alive in the 21st century!
If you are upset that you'd be taxed for the free stuff -- then make sure that we develop systems to tax machines. Yes you heard me, start taxing the machines.
If people were more free to choose what to do with their time, they'd probably spend more time with their family and study more and contribute more knowledge to society. Instead of working a dead-end job at McDonalds.
If you want to read more about the economics of this, I wrote an article:
Another limited duration trial (two years). What's the point? It's not going to measure the real effect. People will know it is going to run out and behave differently than if it was permanent.
Well it's probably better than just instituting a program and hoping it works. Ideally, all government programs should be subject to measurement and re-evaluation.
The choice does not have to be between "do a bad study" or "do no study at all".
A proper study would be permanent and self-contained. Participants would need to give a portion of outside income to the program to simulate higher taxes and/or inflation.
Results can start to be worthwhile early on. But the life-altering decisions people make over a two year period when guaranteed a subsidy that runs out at the end of those two years are not particularly likely to be the same as the life altering decisions people make over a two year period when guaranteed that subsidy for life.
(If you wanted to really understand all the dynamics, you'd probably want to wait more than a generation to understand how subsidy recipients' decisions to raise children are affected and whether those children make systematically different life choices.)
Don't give them the money just for two years, but guarantee them the money over their whole life and you will see vastly different results.
Another "problem" with this kind of study is that they are giving money only to unemployed people. Because it would be also interesting to see what people with jobs would do. I suspect a lot of people would switch from full-time to part-time jobs (at least that's what I would do).
Don't give them the money just for two years, but guarantee them the money over their whole life and you will see vastly different results.
Since people born into wealth are "guaranteed money over their whole life", can't we study what they do with their life compared to what people who are not born into money do with their life? How or how not would this kind of study produce meaningful, legitimate results?
Another "problem" with this kind of study is that they are giving money only to unemployed people. Because it would be also interesting to see what people with jobs would do. I suspect a lot of people would switch from full-time to part-time jobs (at least that's what I would do).
There is some aspect of this kind of experiment/study to find out how individuals would perform if they didn't have the guaranteed income in the past but then suddenly do, but that's only meaningful for the transitional generation. If UBI were truly universal, it would need to be multi-generational. And how would those born with it, never having known anything else, treat/understand work? There's no such thing as "switching from a full-time to part-time jobs" in this context, or at least the impact and meaning of doing so is different than those who have a concept of what not having the guaranteed income means.
While this is true, it is the closest thing that already exists to a basic income, so it should be the first place to go for material to study before/while setting up a more controlled experiment (assuming a highly controlled, completely reproducible experiment actually can be set up in social/economic sciences).
Even in a UBI setup, it's the government's/public's money, not the recipient's, right up until the point where it changes hands. A wealthy family can (and often does) make just as strong of a guarantee for a stipend as a government can.
It appears you're referring to when I said "(assuming a highly controlled, completely reproducible experiment actually can be set up in social/economic sciences)". I'm not making this assumption, I'm questioning if a meaningful experiment can actually be formulated and performed.
If a meaningful experiment can not be performed (and I'm not saying that it can), then examining and observing how people born into rich families operate would give better, or at least no worse, information than an uncontrolled, non-reproducible experiment would. And it might actually be cheaper to study those with money already rather than give people money just to be able to study them.
I don't believe the two scenarios to be as similar as you do.
Wealthy families are able to provide a layer of security that a government stipend never could. You can blow away your monthly stipend from your wealthy family on drugs and alcohol instead of paying the rent, and you're unlikely to end up living on the streets as your family will fold and send you more money. (anecdote: over the last 15 years I've met over a dozen people who were and/or still are like this)
When comparing wealthy family stipends to government stipends, the guarantee needs to be the same. Instead, wealthy families are generally able to guarantee a minimum stipend for their dependents, while governments would be guaranteeing a minimum==maximum stipend for their dependents/recipients.
That study wants to shed some light on whether UBI is viable or not, but limits UBI for two years. I suppose people are then less inclined to change anything in there life and just see UBI as a nice, not-life-changing win in the lottery. People are not behaving as with a "real" UBI. Can we agree on that?
There is some aspect of this kind of experiment/study to find out how individuals would perform if they didn't have the guaranteed income in the past but then suddenly do, but that's only meaningful for the transitional generation.
IMHO you can't ignore this that easily. When more people are quitting their jobs or switch to part-time jobs from full-time jobs due to UBI, the government loses taxes but now needs to pay for UBI. This is super-important to see if this whole thing is financially feasible.
IIUC you are arguing that people that grew up with UBI would behave differently compared to people that just switched to UBI? To be honest I don't feel this particular convincing, why should this be the case? There probably isn't any data on it either. Even if it would, the government/state still has to get through the transition period. One could with the same right claim that future generations are less inclined to work/educate than the transitional generation and thus make financing UBI even more difficult.
IIUC you are arguing that people that grew up with UBI would behave differently compared to people that just switched to UBI? To be honest I don't feel this particular convincing, why should this be the case? There probably isn't any data on it either.
No, I'm saying that this is worth studying, exactly because (I agree) there isn't any data on it.
One problem, as you point out, is the ongoing cost. Socialism works better when there is a capitalist system, externally, to set the prices and help determine demand. The Eloi need the Morlocks to provide for them. The monetary cost for any UBI experiment on individuals' actions is, by definition, being paid for by something outside that experiment. But that's fine, this experiment is meant to answer the question of how the recipients respond to it, not how/if it is or is not long term viable (however the results of this experiment would eventually need to feed into that). And my point is we can start to answer this experiment by examining what people who are born into money do. What kind of jobs do they take? How do they act when they have a guaranteed complete safety net? There is a lot of data available on this, and it is not time limited like a two year study would be.
What would be an acceptable limit ? 10 years ? in that span you're free to plan long project, even raise children in the same place long enough they can develop habits, friends, without too much stress.
I think we could get some insights even with a broken test. But it has to be made by open minded scientists other wise people will interpret it as final truth.
I think it's completely useless. The only results I care about are in the long term (30+ years). This is essentially a 2 year salary giveaway. Not even close to UBI.
Problem is that a "good economy" is a subjective idea. It won't matter if open-minded scientists review it 'cause people are going to interpret the results how ever they want anyways.
Edit: I'm not really aiming to contradict you. I would like to see it analyzed in an unbiased manner.
While widening the scope in either duration or number of people would certainly help, I think this is still useful. It should still tell us to what extent the current benefits system leaves short side gigs and new small businesses on the table.
The time limit may, to an unrealistic degree, encourage the subjects to look for solutions for the long term. Then again the question of whether UBI encourages laziness seems to be out of scope already, since this targets only people who are already unemployed.
Will Finland admit publicly when it fails or will they just hide their idea as if it never happened?
Remember Bio-Fuel? How progressive and wonderful it was suppose to be? Until it caused a global food shortage and suddenly none of the media ever talked about it again.
Amazing isn't it? It happened in 2008 and the progressive HN downvote brigade have already forgotten it.
"“global land grab” first took off in 2008, when food prices on international markets spiked due to a boom in biofuels and growing Asian consumption of meat and dairy, setting off riots around the world and leading key grain-producing countries to introduce export bans. "
The poor in Haiti had to eat dirt, it was on mainstream news but I guess the HN crowd doesn't think back that far. It actually sparked the African Land Grabs of 2007-2008 which a lot of "progressive minority lovers" don't even know about. I was on HN at the time talking about it and was purely ignored for my concern that black Africans were being kicked off their land. Yet, I've been called racist in my past few HN posts for not agreeing with far left policies on diversity enforcement.
Had they looked up the Oakland Institute they would have seen that land grabs the size of France of the most fertile land in African nations were sold on 99 year leases, tax free, by countries all over the world. Harvard actually was one of those behind the investments. Now the media covers it up by calling it "a myth or exaggeration" and ignoring the riots and numerous youtube videos of villagers fighting back.
sigh HN has become what Digg, Reddit, and Mashable are. Time to leave.
>It will give them benefits automatically, absent bureaucratic hassle and minus penalties for amassing extra income.
That last part is huge. A disincentive to work by cancelling benefits is a feature of nearly every current system. It is extremely important that someone test a system without this in it to see how a people react.
This looks like a very important test for the viability of UBI.
It might be some implicit bias that I have, but I read that as minus, or without, penalties for amassing extra income. As in there are no penalties for amassing extra income. There is a double negative in there. I'm trying to find a more authoritative source on whether this is the case
edit: i misunderstood your comment, seems like your interpretation lines up with mine.
These programs depend at very least on the 'savings' government will incur by not having 'massive bureaucracies' to manage the program.
The problem is - Government Unions are the most powerful in every state, and they will never, ever allow any significant layoff of personnel.
So you get a 'new program' without the most important stated benefit.
The reality of government, is that it is systematically inefficient because of entrenched labour practices - no just because they 'may not be good and doing some thing'.
I love public transport.
In Toronto - we still have people at every station selling tickets and making change. 17 of them were on the 'sunshine' list last year as earning over $100K in the year. You read that right: the guys in the booth making over $100K. Granted, this is with 'overtime', but probably not more than many people in the private sector work.
So the government can't help put pay many of it's entities wages that are quite above normal, with massive add-ons and incentives.
Given that small tidbit - can you fathom why it's so gosh-darn expensive to add public transit services???
There are a few other fairly fundamental problems with the program as well, first being simply the cost (Ontario government that is 'pro' program said it would cost $175 Billion a year, basically our whole budget) - and then the moral/incentive issue: where I live in Montreal everybody is an 'artist' 'photographer' 'cinematographer' 'choreographer' 'dancer' 'writer'. But they all work in coffee shops and restaurants. Montreal would go bankrupt instantly because the 'cinematographer' that makes my latte in the morning will quit instantly. In my community - there is absolutely no sense of 'industriousness' in the Anglo sense - they see no problem with fussing about making quite bad films that nobody wants to watch. Were there some latent amazing output I might think it's a good tradeoff, but no, they're seasoned amateurs.
In a rational and sensible society ... this program would be amazing. But then, in a rational and sensible society, there would be very low unemployment, and streamlined government so that the 'means testing' issue would be moot.
As Basic Income is being introduced, unions will be slowly sunsetted. They may still be useful to oversee work quality and workers' rights, but movement to BI means at-will employment and that's not something they'll get to haggle with.
The idea of BI is that you won't be able to live off it in Montreal. It might be sufficient to live off in some small remote town, but not in megapolis. They'll have to still wait tables, or move from Montreal.
Government unions are the most powerful organizations in the world, they will not 'sunsetted'. They have been growing in numbers, dollars and power for a 100 years, it's not going to stop now.
> A disincentive to work by cancelling benefits is a feature of nearly every current system. It is extremely important that someone test a system without this in it to see how a people react.
One example we can look at are university students in Finland. They get 340€ per month student benefit plus €200 student rent support, a total of 540€ per month.
This student benefit is not decreased as long as a student earns less than 1000€ per month from other income. And yes, the students are quite eager to take part-time and short-term jobs.
Except you can just barely live on student benefit. Either you take debt or work, so I don't think the two can be compared.
For me I was bumping on the limits while on receiving student benefit, so it made no sense for me to work any more hours than I did. Had I worked any more, the pay would have been effectively zero, which is crazy in my opinion.
I want to be on record here. Today, December 17, 2016, I predict that this will fail. And by "fail", I mean that this will not become a universal entitlement in Finland.
That it won't become a universal entitlement as it is - that's pretty easy to predict. Question is whether Finland (and the rest of us) could learn from this experiment and make our current system better using the knowledge we gain from it, or not. "Failing" would be an appropriate term only if this would have zero effect on what we have today.
Of course this "test" will fail, they're giving it to a group of people who already have a specific state of employment.
It won't be seen as a safety net to follow their ambition because of its temporary, non-universal nature. It might make sense for them to hoard the cash until the test is over or spend it lavishly as a temporary reprieve from poverty.
I hope this won't create material to make a case against basic income in future.
While I'm not particularly optimistic, I could imagine it succeeding by temporarily eliminating poverty traps and providing stability for the beneficiaries, allowing them to gain experience or pursue training and end up in a much better position in two years time.
This is not a meaningless distinction -- one of the features of UBI is that it is universal. If this just goes to unemployed people we cannot see the change in behavior with people who are earning close to their reservation wage. Do they stop working?
This is streamlined rebranded welfare. Not a paradigm shift.
They're calling it Basic Income, not Universal Basic Income. The goal being to see what the differences are between the unemployed and the control group.
There may be other issues baked into the implementation, but it will be hard to say the result until it goes into action and we start getting data
I agree. The implementation here will still enable us to learn about some aspects of UBI. The question of how benefits affect the motivation to gain re-employment will still need to be studied in further experiments.
I think it's worth celebrating that Iceland is doing controlled tests to explore this way. To really understand the best design for UBI, we need more of this.
- As the pool increases the payout does not, only the number of winners.
- Winners get a basic income for life.
- As another condition they agree to an amount of monitoring so that we can effectively study how they behave with the basic income.
- This one would be hard, but you might have to be made ineligible for other government assistance programs maybe?
State lotteries already offer annuity payouts and even better they sometimes have 100k for life lotteries. These aren't perfect as the amount is too high but it's worth studying anyway. The basic income lottery described above would be an even better approximation.
EDIT: I just did a bit of googling and it looks like this has been tried before [1][2] , but the amounts were time-limited and low. It would probably have to be state-sponsored to take off.
Yes, a lottery winner would be swamped by many surrounding them. Less likely to happen in a trial where the full community is receiving a similar income.
The only bit i'd quibble with is becoming ineligible for other assistance programs - one concern pro-UBI economists raise is that if it replaces social programs, the cost of necessities like childcare and housing will just increase proportionally. There's a good argument to be made that certain social goods are actually better when there is no profit motive for the people providing it.
Aside from that, I really like your idea. Given the number of people who want to see a UBI, this might be one celebrity endorsement away from getting crowdfunded.
NOOO! That is a terrible idea. There is already way too much luck involved in our current economic system. If would really suck if all your friends won the lottery but you didn't.
These kinds of economic lotteries only create more inequality; which is against the whole point of UBI.
It makes more sense to start by giving out a really low UBI to EVERYONE and then gradually raise that amount over time.
These are distinct concepts. Anyone can receive the benefits, so it is universal, but there are conditions.
Advocate for the Unconditional Universal Basic Income. All citizens deserve an equal allotment of the benefits, especially because no nation's populace is ever 100% mobilized as workforce.
Exactly. Its bad because it is reported as a UBI test but is pretty much the opposite because it does not change the one thing UBI changes which is that you continue to receive the money even when you get a job.
Well they're doing it for 2000 people, so I would assume this is more of a test to see what behaviour jobless people exhibit when given a basic income. They're not rolling this out nation-wide yet. I'm all in favour of UBI because I believe there simply won't be enough work for everyone. But I can understand running a study first to test the waters. 2000 people sounds like a good number too. It's expensive, but if things continue in the way that they're trending, then it's a necessary expense.
how pissed would everyone be if one of these people became a millionaire through working on some business while using Finland's cash handout to finance it.
even though the taxes from that is exactly what would make the whole program absolutely free - and is the basic point behind a UBI. It really is "free" for the country.
A proper test of UBI has to make it available to everyone.
So, people will be angry that someone stops net receiving tax money and starts net paying tax money (relative to the services they receive)?
Don't get me wrong, I know full well many people are irrational and petty - but aren't these people that'll find some other irrational detail to get angry about?
Being angry that a cheap system for welfare helps someone get off welfare makes no sense. Especially if one disagree with having a welfare system?
This is the same question pg asked about income inequality in general; if IPO'd founders or hedge-fund managers are mind-bogglingly-rich, why would that piss off anyone else? How does that hurt them?
The fact that are super rich is awesome. The fact that there is millions of people without health care and access to good food and education is a real problem.
That's only true if your country is completely covered in houses up to the maximum possible height of buildings. I'm not aware of any such country (or even city or town -- possibly Singapore or Hong Kong come close).
Fine, housing and roads. I'm still wondering which country the OP lives in where both housing and infrastructure are so dense that "when someone buys a big house, someone else must have a smaller house."
I'm from Poland, where recently the government introduced a "500+" program, which means that every family in the country receives 500PLN per month, per child, from the day they are born to the time when they are 18 year old.
Now, my parents run a company which mostly has physical workers - and for a physical worker, in the "poorer" part of the country, 1500PLN/per month(after taxes) is an ok salary.
The day the 500+ program started, several employees left, literally saying that they have 3-4 children, so by just getting the money from the government they will be better off than working and they don't need a job anymore. They are all jobless and living off 500+ as far as I know.
I would say that's a pretty good indication what will happen with UBI - I'm sure there's loads of people who wouldn't leave their jobs because they like having more money(me included) but for a lot of people if free money is enough to get by then that's what they are going to live on.
These people quit their jobs because they were happy with their child benefits of 500 per child. This given fact, that they quit there jobs, makes me suspect that they would rather choose the strategy of increasing their salary by their number of kids than by working.
If the question would have been 'what would you do', I think I would have quit my factory job as well, actually.
These people quit their shitty jobs because they are no longer forced to do them for the sake of survival, and now have more time to spend with their family, which–I guarantee you—is more valuable than whatever they were doing at work.
Why do you think wanting to quit your job is anybodies fault, but the employers?
What you suspect of other people tells a lot about you, and very little about other people. I would be careful with that.
While I second mrottenkolber that your guess is highly stereotypical, the intention of the polish state introducing their "500+" program seems to be exactly that: increasing the birth rate.
Do you have a source on that, or do you think lawmakers might also be concerned with the well being of children, mums, dads, single parents, young parents–no matter how many children/parents there are?
There are various (english) news articles (for example [0][1]) and also a paper for the European commision [2] (so called ESPN Flash Report) claiming that.
But besides those sources there is also the fact that the child-raising benefits are only unconditional from the second child on, for the first child there is a maximum monthly income to get it.[2] If the main goal was the well being part, then this would not make much sense.
The interesting question is how did your parents' company react to this: Increasing automation? Increasing productivity amongst existing workers? Increasing salaries to attract people? Employing childless people? [in the UBI case that would be analogous to employing non-citizens or illegal workers] Producing less output? Something else?
And yet "Kindergeld" (same principle in Germany & Austria) is more money than that and has existed for decades, and neither country has a much higher unemployment rate than Poland (much lower than Poland in Germany, about the same as Poland in Austria). Furthermore they have fewer children per woman, so this apperantly did not spur a huge baby boom.
So not really sure what we can learn from that. Perhaps salaries are simply too low in Poland?
Kindergeld in Belgium (Flanders) is about 120€. That's a little over 10% of thr minimum wage. In this Polish story it was 33%, big difference. What ratio is it where you are referring to?
For reference, full time day care in Belgium will cost you about 500€ per month if you are not poor.
It's 190€ till age 26(!) in Germany but you get other benefits (most significantly a large income tax break, and 14 month parental leave).
Childcare is about 0-400 depending on your income but you have to be outrigh wealthy to get close to the latter (we pay 128€/m with a high 5-figures €/year household income).
Well, yes, very true. Personally, I love my job and I can't imagine doing something I don't like, but at the same time I know several people to whom the idea of liking your job is extremely foreign.
Just as a side note - I think it would be extremely difficult to find people who genuinely enjoy doing hard physical work for 8 hours a day, even at a high price point.
To me it seems you imply that its OK to coerce certain people into taking certain work. I view the second paragraph as an attempt to justify that position, despite its conflict with basic humanist ideals.
Ignoring the hypothetical nature of your second paragraph, I think you miss the incentive to all "work", which depends on how much the worker thinks his work is worth.
Take my friend the farmer, who happily works on a tiny organic farm (hard physical work) for very little pay, because he feels his work is sustainable, and productive (helps others, provides food).
Also take my friend the construction worker, who would love to build houses for the rest of his life despite low wages, but won't, because he is unable to find employer that will enable his labor to bear fruit. Sure he could build mansions, and commercial monoliths to no end, embedding stone chipped from the Italian coastline into German upper class house-fronts, or build shopping malls. But he's not an idiot, he won't waste his life pouring his talent into luxury products and consumption infrastructure that won't help anyone in the end. He wants to build sustainable housing for people to live in, houses so cost effective everybody can have one.
Depending on coercion to motivate a work force, implies that the work to be done is actually detrimental to society.
Anecdotally speaking you're getting paid to exercise. If it weren't for the shit pay and the no health benefits I genuinely might go back to working part time as a rickshaw driver. I used to be a rickshaw driver and it was good work, and I was genuinely pretty happy. Also had plenty of mental energy available at the end of the day for thinking problems (which is why I said part time and not full time)
> "which means that every family in the country receives 500PLN per month, per child"
Looks like this isn't quite correct:
"The new, universal child-raising benefit of
PLN 500 (EUR 114) monthly is granted
for every second child under 18, and for
the first child if the family income is
below PLN 800 (EUR 182) per capita per
month (PLN 1,200/EUR 273 in the case
of child disability)."[0]
Well, yes - you don't get money for the first child, unless your income is very low. Those employees left their job, became jobless, and therefore were able to claim for the first child too.
> The day the 500+ program started, several employees left, literally saying that they have 3-4 children, so by just getting the money from the government they will be better off than working and they don't need a job anymore. They are all jobless and living off 500+ as far as I know.
Yeah, yeah... I know that kind of story.
This isn't the complete picture. You are presenting anecdotal evidence, and omitting important details. Some important details you are ommiting:
1A) For the job you provide, is the QoL of the work low compared to the wage and potential health hazard(s)? This seems to be the easiest counterpoint to your entire argument. You also lack statistical relevance.
1B) You omit the question wether those workers were easily replaced. If yes, what type of income & benefits did those people receive? If no, why not?
Aside from that one:
2) Which other social benefits exist in Poland?
3) Are these affected by child support benefits?
4) How exactly do the various tax systems work in Poland?
5) Are/were they performing unreported work?
> I would say that's a pretty good indication what will happen with UBI - I'm sure there's loads of people who wouldn't leave their jobs because they like having more money(me included) but for a lot of people if free money is enough to get by then that's what they are going to live on.
Do you have children yourself? Children are a huge joy, but also a huge burden. It is a living hell to both work, and also have children. What some people with good wage do is work full time, both, and have child caretaker(s). Those are going to be employed.
There's also the problem that unskilled work in the West is in decline. I don't know if that is true for Poland though.
And there is the notion that you either work full time, or you don't work at all. Why these extremes? With 3-4 children you are overburdened by them, and it'd be an option for one of the parents to not work full time.
Hi, sorry that you feel that I'm omitting anything. As you noticed - it's an anecdote. My parents run a business, they lost some employees when 500+ started, as far as I know all of the people who left cited 500+ as the reason why they are leaving. That's about the extent of my knowledge on the situation.
I don't see why the answer to point 1A would be a"counterpoint" to anything - I don't think I presented an opinion on the 500+ program? I did mention what I think will happen with UBI, but again, I don't see the answer here being relevant. I also think that you might be under the general impression that I am against 500+ or UBI - while nothing could be further from the truth. I'm happy those people can live and care for their kids without having to work. If people can pursue their interests without having to work on UBI - great! I'm just saying that with UBI, I think it's a very safe bet to say that a lot of people who are in employment right now will actually stop working altogether. But it's just my opinion, it's not backed up by professional research or anything.
In a world where childcare costs for 2-3 children can swallow up the lion's share of a full-time salary, I'm in no way surprised that there would be some who can do the calculus and realize that getting paid to stay home and take care of their own kids might be a better deal than working hard to earn money to pay someone else to watch their kids.
Not that I disagree with you but there might be some points in the Finland constitution that guarantee its citizens the means to live a decent life. My country has that (France as well I believe) and it's a point of dissension between the various point of view of what is and should be social welfare.
If you want to really test UBI and not have critics point out some stupid difference between the test program and real UBI you need to implement a permanent, world-wide, basic income. Other wise "it's not UBI."
Actually, if we speculate with more alcohol sales, then it will be low-tax vodka from ferries to Tallinn - the alcohol monopoly in Finland has high prices due to taxes, so the expert guess of any consumption increase is to get it from Estonia.
Curious thing, Kela (who handle the benefits, among other things) made their sampling code public[0]. The code doesn't really tell me anything though, except that the random seed is taken from wall time.
What's stopping people from taking their universal income and moving to a different country with a lower cost of living. Do you you have to collect it in person? A UBI of $1-2K/month isn't that much in the western world but you could live like a king[1] in the third world.
[1]: Okay maybe not a very rich king but but you'd definitely be doing more than fine.
Assuming that recipients are also taxed on their world income there is little difference between someone not working and living somewhere else or or not doing it without the country. It might be something unfair but i cant fathom it being significant at scale.
The problem is the people coming in: how do you stop high levels of immigration from people that would not be as productive as finnish people and hence would quickly become a drain on the state. The greatest single enemy of open immigration is welfare.
Uneasy to you maybe. If the immigrant has it worse not coming to the land of free money and jobs (even if they're not getting the free money), they're still better off than not coming.
Separately, in a way we already have that uneven net for the same work. If you work two jobs you get paid less (net) than one person doing either of your jobs (for that job, not total). That's what's what a progressive tax does.
> Uneasy to you maybe. If the immigrant has it worse not coming to the land of free money and jobs (even if they're not getting the free money), they're still better off than not coming.
Its a market distortion that could create all kinds of problems.
You could argue that's discrimination( there are equal pay and equal wages laws around employment).
You would not be allowing immigrants from doing a wide range of jobs that are desirable (and hence pay less) and 'condemn' them to do the worse jobs that pay more. So for example, immigrants will be less represented in arts, journalism, administrative work. Low paying jobs in general will not be living wages without UBI. Think that minimum wage is likely to drop considerable if you have UBI.
It undoubtedly creates an "US vs them" gap measurable in money.
> Separately, in a way we already have that uneven net for the same work. If you work two jobs you get paid less (net) than one person doing either of your jobs (for that job, not total). That's what's what a progressive tax does.
UBI is very likely not going to apply to most workers, maybe minimum wage and down. You dont really need much of a minimum wage if you have an UBI, which means many pleasent low skill jobs would pay very little (clerical work for example). So immigrants would be barred from such jobs without UBI.
Also its true that taxes make 2 people get different net income but that comes from their wealth, not their nationality. Someone with a house and a mortgage might get more income than an immigrant that has nothing. That makes it a regressive tax (the immigrant pays taxes that goes to the richer guy).
I'm curious in what universe clerical work is considered pleasant?
In a world with UBI, I'd be very tempted to pack it in and go do some rewarding, enjoyable manual labor, like farming or forestry or carpentry or improving hiking trails.
In comparison to janitorial, customer service, retail sales, garbage disposal, truck driving, etc etc.
There are waves of people that would quit their job for a cozy clerical/administrative work that was cost-effective for their suffering. HOw much I dont know.
> Also its true that taxes make 2 people get different net income but that comes from their wealth, not their nationality.
Most (all?) western countries tax income, not wealth[1]. Wealth has no impact on income taxes. If I have $1M in the bank go work for minimum wage and earn $10K for the year, I'll get taxed the same as someone with $0 in the bank earning the same $10K. The contrast I was making was someone with two jobs that make $10K each. With a progressive tax structure, each they are making less net at each job than a person working for $10K at either job. That's because the second $10K would be taxed more than the first (okay maybe not at $10K but it's true at $25K to $50K or $50K to $100K...).
> Someone with a house and a mortgage might get more income than an immigrant that has nothing.
Again that makes no sense. A house and a mortgage are expenses. The only impact on your taxes would be deducting the mortgage interest or real estate taxes. They're not increasing income, they're lowering taxable income.
> That makes it a regressive tax (the immigrant pays taxes that goes to the richer guy).
That makes no sense. There's nothing immigrant specific about that. Unless you think all immigrants are renters. Yes interest and real estate tax deductions (and really deductions in general) are regressive in that higher income people who are already paying higher taxes benefit more, but there's nothing unfair about it from a born national v.s. immigrant basis.
Last I checked, immigrants are allowed to buy houses too.
[1]: The one exception to that is taxing real estate but on the whole cash, investments, or even piles of gold are not taxed.
What is that gonna achieve exactly? Aren't prices gonna just inflate upwards and things become less affordable?
If you just pay everyone X amount of money every month for whatever, it just means that in order to produce something you'll need to pay someone a lot more than that X amount in order to work and produce it and also it means that that item is gonna increase massively in cost in order to pay the items production itself.
I am highly against that idea.
You want to solve issues? Give free food/water and shelter for survival, thats all a human needs. It doesn't need to be a food from a chef or Evian water or a house with even an internet connection. All it needs is just to provide some safety that that person is not going to die of starvation or weather. Other than that if you want to have a better have and lifestyle well you have to work for it.
> What is that gonna achieve exactly? Aren't prices gonna just inflate upwards and things become less affordable?
Inflation is generalized increases in prices.
I really dont understand why people make the argument that UBI would cause inflation due to demand: it would shift prices of many products (because increased demand in basic cheap goods) but probably marginally so and even then it would not affect inflation rates as a whole. High luxury cars are not going to have more demand.
> If you just pay everyone X amount of money every month for whatever, it just means that in order to produce something you'll need to pay someone a lot more than that X amount in order to work and produce it and also it means that that item is gonna increase massively in cost in order to pay the items production itself.
Outlandish claim! We dont know how its going to happen. Its not true that you have to pay more, actually you could argue you will have to pay less, as UBI supplements the income: i.e. someone that wants to make 1500U$S a month, and with UBI gets 500, might be satisfied with an easy 1000U$S job.
True, the jobs that nobody wants to do will probably have a higher premium: it gives higher leverage to every human being as they can choose not to work a bad job like garbage disposal, or cleaning up road kill. So some labor is subject to decreased supply,and others of increased demand. Its impossible to know what would happen without experimentation.
> You want to solve issues? Give free food/water and shelter for survival, thats all a human needs.
This is the exact opposite point of whats truly attractive about UBI. Free food and shelter is very expensive to give through the state ,and much cheaper to just hand out money!
For example, SF spent 241 million dollars in homeless programs in a year[1]. There are about 6,500 homeless people in SF[2]. Alternatively, the city could have given them 37k U$S cash and come out ahead, effectively putting them above the median income in the US[3]
In theory, the city could literally make the homeless people disappear overnight at no extra-expenditure.
> What is that gonna achieve exactly? Aren't prices gonna just inflate upwards and things become less affordable?
It is a try to save capitalism from itself. You see, today's tech is turning entire sectors obsolete (e.g. self-driving cars). In a standard capitalistic economy, you work at XCorp who pays you (the employee) in order to be able to buy their products. This model worked in the 20th century where industries (e.g. Ford) had thousands or even millions of workers all over the place. Now we have 5-member companies running startups with millions in turnover.
Today average Joe has a very hard time finding a job that will allow him to create a family and live well and no, not everyone can become an engineer, lawyer, doctor or banker.
So, we either find a way to re-distribute wealth or we're up for a bumpy ride that will end bad for everyone...
Universal income is an idea that is making rounds and is generally accepted by modern economists (left, right and liberals) in various forms of course. The idea is that someone with rather basic needs, will spend all his income in food, shelter, clothes, etc. So, since it's nearly impossible for them to find job, just give them money to spend buying stuff, even iPhones if possible...
I believe that we're in a phase of uber-consumerism. To sustain this kind of unnatural growth, capitalism needs to find virtual ways of creating demand or we need to start exporting to mars.
What's the evidence that results of such study could be generalized to the entire population? I mean, yeah, 2000 people seem like a big group, but one might have different ideas about what to do with free money if the society around stays exactly the same vs when everybody else is also entitled to UBI. When I'm unemployed and look around and see all my friends work I might feel quite ashamed of myself and willing to change, but if all of them "retire" at 30 instead this might not be exactly the case.
Now, the Finnish government is exploring how to change that calculus, initiating an experiment in a form of social welfare: universal basic income. Early next year, the government plans to randomly select roughly 2,000 unemployed people — from white-collar coders to blue-collar construction workers. It will give them benefits automatically, absent bureaucratic hassle and minus penalties for amassing extra income.
The government is eager to see what happens next. Will more people pursue jobs or start businesses? How many will stop working and squander their money on vodka? Will those liberated from the time-sucking entanglements of the unemployment system use their freedom to gain education, setting themselves up for promising new careers? These areas of inquiry extend beyond economic policy, into the realm of human nature.
I am not a fan of the idea of universal basic income, but I would love to see the existing social safety net system get tweaked to be less retarded. I hope this experiment goes good places.
Not exactly. While it's initially only being offered to unemployed people, it will have reduced bureaucracy and won't be withdrawn if people start earning.
It's by no means a perfect test of UBI, but "re-branded welfare" isn't really fair either.
Finland's population is 5.439 million, It may work for 2000 people but will it be workable and scale up to 10-million, 50-million or 100-million people? I believe the "square cube law comes into play.
Ooops. I should have referred to the Economies of scale rule instead. Perhaps 10-people could manage 2000 payouts whereas as the population grew to 200,000 or more regional offices and support staff would grow and inefficiencies would become more expensive.
Why don't we just cover everyone's basic needs and be done with it?
This is a pointless discussion. Just give everyone enough food, shelter, and free access to medicine. It'll create a society where we don't stress over losing a job because we don't know how we're going to get our food tomorrow.
The reason that some people think this "disincentiveces" people to work is that they'd have to pay higher wages and wouldn't be able to exploit human beings, as all capitalist systems do. That's it. That's their whole argument. The rest is just dressing it up with empty moral questions about "giving away the fish instead of teaching how to fish".
I agree with you in principle. But I am extremely dubious of using the state to accomplish this. I would rather see a cultural shift where we all agree we don't need state coercion to get us to help one another. Anything the state does IMO will be inefficient and involve pay offs to a few select chosen corporations.
Do we need force to do this? Do we need cronyism? Do we need corruption?
Corruption exists in corporations as well. Who do you think pays bribes to state officials?
The state can be efficient too, regardless of it being a monopoly. It just needs the same thing an efficient company does: overseers and the right push to be efficient (a.k.a. an informed and well educated population that knows when they're being scammed and demands better services for their taxes)
The US Federal Government can't deliver a fully socialized healthcare system despite spending more money per head than many other developed nations that manage to provide full coverage. What makes you think they could possibly efficiently administer UBI?
What possible overseers can a government have? Authority begins and ends with them. It has token overseers sure, the same way a dictatorship to china might point to its token elections. But that is all.
Well, there needs to be an actor that has enough influence and power to actually make it all work. UBI isn't going to work if it's ultimately a volunteer based system. We already have lots of voluntary donations ($ and time) in our present day.
The problem with your thinking is that it ignores that it takes "work" to get people those basic necessities you refer to. So there absolutely is a danger in disincentivizing people to work, if people contribute nothing, but consume even these basic needs.
I'm not against basic income, but there absolutely is risk to society.
The amount of work to produce our basic necessities has fallen decade after decade for over a century.
We are wringing our hands over the perceived threat of "lazy" people when the cure for this alleged disease causes so much misery for so many people already. It's not a fear founded on empirical evidence.
The fear of lazy people is not founded on empirical evidence just as much as the idea that people can be encouraged to contribute nothing without detriment is founded on empirical evidence.
Once again, I'm not sure about how the reality would play out on a large scale, but obviously there is risk.
Worth noting that less than 100 people on Earth have the net worth of half of Earth's population; half of the world's population is 3.5 billion people.
Do less than 100 people on Earth have taxable monthly income (which can be used for UBI) same as half of world's population? Or same income as UBI for half of world's population?
Net worth is irrelevant.
The incentive system you mention only exists under the assumption that everyone needs to work. My understanding is that with the productivity gains of the digital age, those that are working are able to produce enough to cover those that are not working. We have an abundance of wealth, more than enough to ensure everyone's most basic needs are taken care of. It's just at odds with a capitalist economy.
Because giving people money is a better way of doing the same thing while matching people's preferences.
For instance, food: Handing people a government decided food basket will not optimize for what people want to eat, or know how to prepare. Give them enough money to feed themselves, and we spend the same amount and we have happier people and less distortions. Same thing with shelter: Money means that we let people make their own choices, instead of recreating a new version of the projects. The one place where the market tends to fail is medicine, but that's because people's preferences there are a lot less valuable, as all people really want is someone to help them get healthy when they are sick. And even then, there are cases where giving people choices is better: The US' end of life care is so expensive and so dismal in part because what is covered and what isn't is decided by third parties: Often people prefer to end their life comfortably than to do many of the uncomfortable, but somewhat life extending things that we do to them.
That's the ultimate argument for money: Maximizing people's choices in how to go around getting the basic necessities of life. The trick is that the amount of money we give people would have to be modified to make sure said necessities can be met.
I couldn't agree more with your point. Mine was just basic needs should be covered for everyone. How? That's up to debate, but giving people money increases demand for goods, which activates the economy, so I'm all in for this program.
Everybody has a different idea of a risk/reward ratio he wants in his life. Some people just want stability with basic needs met, and have no ambition for more; you would actually find a lot of them in modern russians who want Soviet Union back. But other people are quite OK with a risk of being sick and homeless as long as they keep their freedom to make their own destiny. And the notion that they have to pay a lot of money to some organization just to pay for other people's mistakes is completely alien to them.
I'm not trying to convince you that their worldview is better. But if you're talking about state-wide things, you have to take those people in consideration, too.
Let's back to basics. How do we cover the needs of one person? Better, how do we cover only the need for food? You need to produce rice, beans and meat. How do you produce all that? A lot of ways ... but you need to produce. And that word alone is the problem here.
The moment someone stops producing, he is a burden. He must be carried on by someones else production. The government does not produce anything. The moment he starts handing over cash to people who do not produce, he is transferring the production of someone who works hard to someone who does not.
You want to help those people? Pay them to study, get some skills. Pay then to clean the streets or the public bathrooms.
But for God sake, do not pay them to do nothing. It's unfair with the rest of those who actually work really hard for this handed cash.
People out of work is not that way because they're lazy.
They're that way because the only jobs they can get are jobs that will have them work all day long for a pay that won't even cover their basic needs.
Human exploitation in several forms is all too real and happening right next to each one of us, and almost no one seems to recognize it.
Do you want to give them jobs? Fine. But don't provide minimum wage that will make them have to work 70 hours a week just to make ends meet, and want to kill themselves afterwards.
You /might/ replace 'unfair' with 'immoral'. Lots of things in life are unfair and are just a part of life, so there's a mentality that unfairness is just a part of life. Hopefully those who wish to take from those who work can see that this is theft and theft is immoral.
Productivity per worker-hour goes up as technology progresses. It's okay to take some of that increase away and use it on other people. It's a mutually beneficial setup between you and society.
Instead of just giving people money our governments at federal / state / local levels should become employers of last resort for everyone who has exhausted their welfare or unemployment benefits. Guarantee 30 hours / week at minimum wage to anyone who wants to work. Even if it's just trail maintenance or graffiti cleanup they will at least be maintaining basic employment skills, and have enough spare time to retrain for something better.
How about actual job and skills training, instead? I would much rather my tax dollars go to training an electrician than some made-up bureaucratic job.
It's not either / or. Someone can work 30 hours / week and still have time for training. I do agree that we should do more to get the long-term unemployed into training programs at community colleges and trade schools.
This is what I really support, but would take it a step further. I feel the problem is so many countries have this poverty line unemployment payments as a once size fits all. I think we should break support into 3 categories.
1) for the immediately unemployed that have had a history of paying tax, give them generous payment coverage between jobs for a 3-6 month window type thing. Something like 60% of their pay.
2) after said time window, if no unemployment is found you are given guaranteed 30 hours (or whatever is right) work at minimum wage in areas that are as non competing the the economy as possible. E.g. Beautifying the city or helping seniors etc.
3) if you refuse to take minimum wage work you can get a set amount of food and basic accomodation to keep you from beng homeless/starving.
From point 2, as automation becomes more prevalent and effective the number of hours worked can be reduced to match this progress.
What's the point of making people do stupid ass jobs?
Now I'm all for spending money on the commons in ways the private sector is too petty to address, but do this for the results of the investment, not just for employment.
I'm more OK with adjusting UBI to cancel out fluctuations in infrastructure spending.
I agree with basic income, but most analyses of it are backwards.
For most of history, governments addressed unemployment by starting wars. By shipping off to war, the unemployed temporarily get a job. They either come back dead or ready to take a new job in an economy revitalized by the stimulus of government war spending.
John Maynard Keynes noticed this pattern, especially during the Great Depression and WW2, and made a brilliant suggestion: continue with these government interventions, but keep the government spending and drop the war part. We call it "Keynesian economics", but really, what Keynes invented was capitalist peace. And guess what, since then, no two countries that both had McDonald's had fought a war against each other since each got its McDonald's. [1]
We need a Keynesian boost today, not because of technological progress, but rather the contrary: the rapid technological progress of the 20th century that brought tremendous economic prosperity to humanity has finally come to a grinding halt. Let's stop denying this. The stream of lifechanging breakthrough inventions of the 20th century, from A (antibiotics) to Z (zippers), have ended. As a result, we now suffer from secular stagnation, something Keynes understood very well back then, and Larry Summers understands in the present. [2]
It's especially absurd to claim that automation is the cause of this. Automation has already upended society: it was called the Industrial Revolution and happened 200 years ago. The upheaval caused then to human lives and employment was far more dramatic than anything happening today.
And basic income is simply the most fair way to apply Keynesian policy. It is more fair to split the money up and distribute it equally to every individual than it is for the government to buy things on their behalf. Highly distributed spending will also avoid creating market distortions and liquidity traps. [3] And the resulting economic boost will lead to increased tax revenues and, who knows, maybe more jobs -- this time not subject to labor market distortions caused by people being desperate for work.
Keynesianism is like making waves in a pond and pointing out how much higher the water has risen.
It ignores where the resources come from and the jobs being performed in other parts of the global economy that must be cut, often in some other country, because the resources are being used for something else.
If a country is going into debt to stimulate, its pulling resources from other countries where jobs have to decline. But perhaps those declines are more spread out and harder to measure and understand. So we can make the mistake of thinking they don't happen.
But what if a country stimulates by printing money, not borrowing? Money is only a medium of exchange, not an actual resource. Creating more of it just means more it has to be used to get the same result, if you look at what really happens over time, as opposed to comparing prices the day before you print with prices the day after.
It's totally misleading to think of the economy as a pond holding a fixed quantity of water. The water level does change, and sometimes you need to make waves to do it.
The babysitting co-op Krugman referred to was a barter market where people can only trade ONE thing.
And where each member had to contribute 14 hours worth of babysitting a year just to pay for using the system. That's why there was more supply than demand in that "market" when it started.
At any given moment, the available resources ARE fixed. They aren't increased by moving them around.
If you increase the amount of money available, that bids up prices for the existing resources.
If low skilled labor is already fixed at an artificially high price (like a minimum wage), a general price increase will reduce the value of the fixed wages paid under these arrangements and increase employment.
But you could accomplish the same thing by lowering the minimum wage.
No additional value is created by stimulus. The extra money is just undermining the effect of things that have been hobbling the market all along.
But creating more money has other destructive effects and causes people to make unsound investments. It creates bubbles. These bad results can take years to develop.
All the quantitive easing the Federal Reserve did after the financial crisis has helped re-inflate the housing bubble. Rising rents that also cause people to have to move or suckers them into buying into the bubble. A replay of earlier stimulus.
While all the churn in the economy benefits some industries, it destroys wealth for all income levels in the long run. It puts the country in further debt and makes us weaker.
Instead of resources flowing to industries that make the country more prosperous in the long run, we over-invest in real estate.
Without all the subsidies, both direct and indirect, real estate would be a much smaller part of the economy and there would be more capital for investments that actually create more wealth, instead of things that merely appear to do so in the short run.
"Somebody" has to pay for welfare, too. The fact that all social welfare programs have a cost is not a reason to reject all social welfare out of hand. Do you really think welfare programs should be abolished? What level of starving to death and freezing to death in the streets are you comfortable with?
Compared to a regular welfare system where they stop paying if the recipient has the ability to support themselves / doesn't need it (from each according to his ability, to each according to his need) UBI is the opposite of communism. This one where people have to be jobless at the start isn't ideal though.
It isn't a brand of communism. It doesn't involve any nationalization. Also, no communists have ever implemented basic income. It isn't even an exclusively left wing idea. Milton Friedman supported it, Charles Murray supports it.
Thrilled that the idea that ones basic needs be met as a basic human right is gaining traction. Granted, in the form of our most common commodity-abstraction apparatus (cash).
I feel like we're creating a new government program to counter the failures of an existing one: education. If people had marketable skills, it would be a lot easier to find work. Perhaps tax revenue should go to education and training, instead.
I think we're a long way off from total automation of most industries.
Or perhaps we should drastically reduce government's role in education altogether. After all, we were doing fine before the Department of Education opened in the seventies!
As many have noted, this is not UBI; full stop. Also, you can't "test" something that is supposed to be universal by definition, on a micro scale and to a selected subset.
Doesn't sound very universal. One of the big factors that make it a good idea is that receiving the basic income shouldn't make you disincentivized from doing more and getting a job, etc. Otherwise, how is it different from existing welfare programs and such?
From a first cross-read, this article is bluntly discrediting UBI.
Starting with numbers: about 204M working age population in the US - hence the USD10K to each of them example would just make somewhere what is spend yearly for military and banks - the 8 times numbers cited in the article of what is spent today does not make any sense.
The linked article does not mention any amounts that Finland wants to provide to the 2k people - instead it is referring to Swiss calculations - last numbers I've heard with Finland were on par with current social security / poverty level pays (~EUR600 p/m) - this of course does not enable most of the key effects intended with an UBI (money into spending, freedom of choice for work etc) - it only continues the current system (with some potential savings within the administration).
To get a better understanding we have to at least repeat the Canadian experiments from the 1920s (proven that it is substantially beneficiary for the economy overall) - more money than poverty level, people must gain freedom by the possibility to live.
Given that soon a large proportion of people will not have a chance to find a job that will allow them to survive, we either go back to lords and serfs or actually look into potentially sustainable solutions.
What's to stop UBI from "cancelling itself out" due to inflationary effects?
Prior to UBI, the lowest possible income is zero. After UBI, the lowest income is X. The poorest people in the nation will have an income of X, so X becomes the new relative zero, the new baseline. Prices of everything (food, housing, whatever) will reset relative to X. So uni will become worthless shortly after it's introduced.... but only if it is truly universal.
Someone feel free to tell me if I'm missing something.
Don't most countries already have welfare systems that keep the lowest possible income at X already? UBI is just supposed to simplify those systems by replacing them with a single non-means-tested system.
Actually, it is. States/Central Banks can print money as they wish. Go be more exact: printing isn't even necessary, money nowadays is barely more than a replicated database entry.
Yeah, the effect of a windfall on everyone who already had their basic needs covered would cause one-time inflation, but at least it shouldn't be an inflation treadmill of "people get UBI, prices raised to meet that UBI, raise UBI again, prices rise again" any worse than we have already with welfare.
Say you have $0 income. A new policy comes into force that gives you $500 a month basic income. Even if prices increased 10x you would still be better off than before. Prices would have to increase an infinite amount for you to be able to afford the same amount of goods as before (zero). Even if you had $500/month before, you'd still be better off as long as prices don't increase more than 2x.
I don't know enough to advocate for or against basic income, but I'm pretty sure that it doesn't amount to a no-op. Whether it's done through printing money or taxation, it ends up redistributing wealth from wealthier people to poorer people.
In the case of printing money, the resulting inflation would cause everyone's money to be worth less: rich people, having more money, would end up losing more. In the case of taxation, the redistribution is more direct.
It is assumed that someone without a job will still get some money in the form of unemployment benefits, so their buying power won't be $0. Therefore, your premise is wrong.
Sure, but if hyper-inflation results in that USD 500 buying me a loaf of bread each month, I think 'better off than before' is kindof irrelevant. There have to be tangible benefits to the recipient over and above, say income from finding pennies in the street...
Consider supply and demand. Say there are 100 people and they all need 1 of resource Z and 100 of resource Z are available. People who have only the UBI can afford the lowest quality of Z but those who have UBI + income will all try to get a higher quality of Z. Net result is that earlier it wasn't possible for low income / no income people to get resource Z, now they can. The rich however will have to start paying a slight premium for finer things in life.
This only true if there is no competition and demand for the good is completely inelastic. What stops grocery stores from doubling the price of food? The other stores will make a killing by undercutting them. I think food is pretty safe here.
I am concerned about housing though. In some places, the supply is extremely inelastic, limiting competition, and the demand is also inelastic due to the difficulty of moving. Although UBI could make moving to a cheaper area easier.
This is why a Land Value Tax is the clearly logical way to fund a UBI-- by collecting land rents in this fashion, you remove the ability for landlords to effectively confiscate the UBI.
Alas same effect, the TAX by owners will be passed onto renters with rents going up. Now if excess of housing that will eventually catch up and if a shortage then this will only exacerbate the divide.
So much that can go wrong and equally right, hence they are testing this. Though a small test will be isolated from all global country impact and bias towards a false positive due to small impact. If that is projected to the entire country then and only then will the impact be truly seen.
But be interesting how this works out, I'm sure the initial trial/test will work out but once you scale that across a country then you start to see the true impact and outcome.
One question to ask yourself, when mortgages and taxes increase the costs of owning a property - have rents ever gone down! I'll say no upon that.
That's not how Land Value Tax (LVT) works, at least under the economic theories I'm familiar with. And there's this quote[1]:
"Because the supply of land is essentially fixed, land rents depend on what tenants are prepared to pay, rather than on landlord expenses, preventing landlords from passing LVT to tenants."
Unlike property tax, LVT only taxes based on the land itself, and so doesn't disincentivize more productive (i.e. costlier) use of the land.
Rents go down when demand goes down. I've lived in the bay area through two booms and busts now and rent was higher in 2000 than it was in 2003, and higher in 2007 than it was in 2009.
When you project a local experiment to an entire country, don't forget that a concept similar to UBI known as "communism" has been tried before in the USSR, China, Cuba, and a few other countries, with limited success and many downsides.
Yes rents can go down if demand drops, but if you scale over a period longer the trend is always upwards. So short term drops and spikes will happen due to population shifts. When demand low, building new places stops until it catches up again.
But excellent comparison with communism and indeed that is comparable upon many levels. Though more niche in this aspect it still falls within that stable of thought.
As an aside the only example most people aware of in which communism style approach works would be the Star trek universe. Which only add's fuel to the old saying "money is the root of all evil".
Certainly be interesting how this pans out and I'm mindful that if this was a whole country taking part that the true effect would take a few decades to get a true picture of the impact. With many aspects coming into play and let us not forget economic migration and with Finland part of the EU Schengen project then that aspect might be more impacting than envisioned. After all look at Spain and the UK free access to health care and how that is impacted by free movement, certainly not inconsequential.
Well in fact there is no clear ressemblance with communism. Communism primary principle is that all the means of production are state owned, and everyone is therefore salaried by the state, earning as much as everyone else with no oncentive to work more and or better. Basic income aims to the contrary, by helping businesses to offer more flexible work contracts (part-time, temporary work, ...) and potentially lower wages (if the UBI is 1000€/month someone who currently earns 1500€ each month could take a 500€/month position and keep the same life level). It is in fact a completely capitalist idea
"earn more for producing less economic output" is not capitalist. you can't simply change the meaning of words to fit your agenda and convince anyone but the extremely gullible.
There are several different ways to implement UBI (look up "negative income tax" for one example). None of them actually result in someone earning more by working less, the marginal income seen given marginal nominal income still has a positive slope.
Won't the cost of hiring staff increase if no one is willing to work for low wages, thereby increasing the cost of any good or service that relies on those UBI adjusted wages?
I believe that to be true. However, I think the reason why we are trying this form of gateway communism now is because labor is becoming less valuable and owning the means of production is becoming more valuable due to automation. At least that's the theory. Because of this the resulting increase in minimum salary for any service to be provided by humans should be less impactful as it would have been in the past. If this wasn't the case we wouldn't need UBI. I think UBI is becoming important because there is an increasing number of people whose participation in the workforce is not needed anymore.
Inflation is a result of increases or decreases in the money supply, wealth transfers like this have minimal impact.
Consider in these terms. % of economy going to the bottom may raise from say A% to B% but it's that does not push inflation. Because X% of the population has slightly less money to pay for the wealth transfer ~B-A.
You're confusing the distribution of money with the supply of money. The distribution of money affects economic priorities. The supply of money (as total income per unit time) affects the overall inflation. While the priorities of an economy will certainly affect prices, it's that some prices will go up and others go down.
Unless money is redistributed then new money will indeed have to be introduced under UBI.
If it is redistributed, then taxes seem an obvious method. And clearly the richer should be taxed more, since we're attempting redistribution.
Unfortunately we all know that trickle-down economics fail, and corporate/elite lobbyists work hard to restrain corporate/elite taxes, to keep worker wages low, and to engage in practices such as zero-hours contacts.... and so on.
So... introducing new money risks inflation. Redistributing money risks perpetuating the existing broken system.
My understanding is that most UBI proposals see the UBI as a replacement for more traditional welfare with some amount of raising taxes to keep it debt-neutral. As for the rest of what you're saying, I have no idea what you are actually trying to communicate.
If there's a big influx in the supply of money bit it only flows into one sector of the economy then the average inflation might be higher, but won't necessarily mean a constant rise in all prices. So I would argue distribution matters also. Likewise, all that new money being spent inside a certain market might raise the average price level if it's supply constrained, but it might also grow the numbers of players in the market leading to higher supply and price competition.
If it's paid for by taxes or borrowing there won't be any net inflationary effect because the money going to the recipients comes from elsewhere in the economy. The new stuff that poorer people are now buying is payed for by the creation of less stuff for rich people. Economies aren't perfectly flexible so there will be some increase in the price of good used by poor people in relation to the goods used by rich people but that effect won't be huge. Of course, if an UBI drastically reduces employment that's a whole 'nother story but people are doing these pilots to figure that out.
The inflation would probably not be homogenous, different markets have different pricing mechanics and characteristics. Another variable is percentage going to debt financing, which will have a stimulating effect. One in increased gdp because the percentage of gdp going to repayments would likely drop, and secondly one in higher degrees of business leverage are likely, leading to bubbles in certain markets. Inflation probably won't be a general issue while the economy is not approaching max capacity, but there might be inflation in some markets, much like QE is acting like a basic income for the top percentiles through financial asset inflation. Employers in certain sectors will probably lose a lot of leverage over low schooled workers, might increase prices through cost and demand, finance will probably try to siphon off as much as possible of the extra income. Assumptions assumptions, probably way off base :)
For a good idea of what this type of program can do to a society, take a look at the native Americans. The monthly allotment received by most only perpetuates very serious social problems. I know that most who will push for these types of programs have good intentions, but the outcome will probably prove to do more harm than good, generally speaking.
Yeah there's definitely nothing else to explain why Native American nations are doing so poorly.
Edit: This was too snarky but also the parent comment is such a bold claim with no evidence justifying it. Counterclaim: Canada and the US have done plenty to destroy the fabric of native societies since their inception. As an example, the residential school system of Canada[1] which ended in 1996. History is so forgettable isn't it?
I don't know about the native americans... but I agree than UBI just doesn't seem to make sense.
What has always been more appealing to me than UBI is just the idea of sustainable living... i.e. people own their own houses and there is no property tax and they have very cheap renewable energy sources and maybe cheap robots to grow food. making really cheap stuff to survive just seems like a better long term plan to deal with technology than giving money away. that just devalues money causes inflation.. makes prices higher. seems to me.
Why not universal basic housing. universal basic internet. universal basic food. universal basic computer. Make it illegal to sell them on the open market.
Anything except universal basic income. You want cigarettes / alcohol? do some work on the internet. Amazon mechanical turk.
The model selected maybe problematic.
A) There are additional benefits for helping to pay rent which are income dependent.
B) There are special circumstantial increases to benefits replaced by basic income, that state has to pay inorder to fill its constitutional equality requirements. For instance increases in unemployment for dependent children, expenditures for education program participation for unemployed...
Now testsubjects get them by applying for them. Whats potential problem is what it takes to LOOSE them, its a risk factor on every action to earn temporarily, or taking a risky move to try to start a business. Latter causes also a high risk at the end of experiment, unless you have folded it long before end of experiment.
UBI is a terrible idea. Anyone who thinks that the government handing out money to everyone is a good idea needs to snap out of the propaganda machine. Those who fund you, control you. There is no way around that. When the people funding everyone is the government, and the people do nothing in return, that places huge amounts of power in the hands of a single entity, and removes all power from the people.
Large companies are getting larger. There are only a couple of choices in any category, and single companies own many different markets. When you combine that with UBI, you have the government handing you a check, and then you have a choice of a couple of companies to spend that money. The difference between this world and communism is almost nothing.
I have never heard of any group of people who were happy on government welfare. Whatever the supposed problem this is supposed to address, it is not a solution. People who are not working at all are not happy.
If I were to guess, I would say the real problems that need to be addressed are:
too many extremely large companies, often supported by laws they lobbied to create.
corrupt government that has no interest in its own country
population increases.
I mean, many of these people proposing UBI are living in countries where they are actively increasing the population. If you have an unemployment problem, why are you increasing the population?
You are just replacing one leverage with another (employers with government). In most places, the employers own the government anyway as they provide the revenue.
I don't know what your first point means. Your last point, you are just repeating what you have read somewhere. Population increases do not change the aging population. The new people also age believe it or not.
Also stop being childish with your "wat" bullshit.
> You are just replacing one leverage with another (employers with government).
> I don't know what your first point means.
This I believe is the misunderstanding. UBI is designed so nothing you do will affect your basic income; there are no conditions. Yes, on the meta-level the UBI policy itself could be changed, but assuming it won't the government has no extra leverage over the citizens.
> Population increases do not change the aging population. The new people also age believe it or not.
I meant:
- Slowing population growth and longer life expediencies (Europe, Japan, US might catch up a little bit) together result in more old people as a portion of the total population. Some argue this is dangerous for the welfare state.
- More population growth crates more demand and helps economy grow.
You can similarly argue growing economies are bad for human and environmental health because more economic activity conventionally means pollution. For example, https://www.washingtonpost.com/news/wonk/wp/2016/10/14/resea... (sorry for the sensational headline). But growing economies are also very good in other ways.
It would be great if we could have "barber poll" economies and populations that always grow yet stay the same size, but calculus does not allow for this.
Personally, I think this a great thing for creatives and researchers, knowing they can spend as much time as they need to create real value for people without having to think of revenue or investors profits.
I heard/read Swiss denied this proposal though, what a shame.
Voters in Switzerland recently rejected a basic-income scheme
I can't understand why the Swiss politicians wanted to ask the general public for a permission to do an experiment. How can the Swiss population be sure universal basic income will not work when no nation has yet implemented it yet across the whole population?
I could relate to the article. I'm currently living in Oulu, and was also working for a Nokia contractor until 2011. Unable to find work, I went back to polytechnic college for 3.5 years to update my skills and perhaps wait out the recession. Unfortunately, the situation hasn't gotten any better and my new bachelor's degree doesn't give me any advantage.
There are plenty of entrepreneurs requiring people of various backgrounds, but these are generally unpaid positions. I am currently writing a web-app for a charity, and have just launched a customised wordpress site for a new business. These are of course unpaid, and like the article states, it's not worth the risk of starting my own business (being a freelancer for example) as it would mean coming off benefits completely and hoping you'll make enough to pay for everything you need to pay for. UBA would suit me great. I could become that freelancer instantly, and with no fear. That company, who's website I just launched wanted to pay me, but legally it was impossible due to the reason I just mentioned (freelancing).
I'm also currently writing a language learning app, a mashup of my favourite features of DuoLingo and Memrise in my free time. Perhaps monetising that in some way may lead me out of this stagnation.
It seems like we can learn so little by selecting only for jobless people. The best way to do a BI test seems to me to get a random sample so we can test how it affects people in various circumstances. Selecting a specific demographic like this seems more a political move than a scientific one.
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