12-year study will look at effects of universal basic income(mitsloan.mit.edu)
mitsloan.mit.edu
12-year study will look at effects of universal basic income
http://mitsloan.mit.edu/newsroom/articles/12-year-study-looks-at-effects-of-universal-basic-income/
141 comments
I think that you raise an important caveat, but I'm not as pessimistic about the transferability of this evidence; if the general claim against UBI is that it will disincentivize work, but we don't measure any disincentivization in this study, then it is certainly possible that there is a disincentivization effect that kicks in at some higher minimum wage level; however that result would be a strong justification to increase funding for similar research in wealthier economies to see where that effect might (or might not) kick in.
And on the other hand, if all of the predictions of the anti-UBI camp are borne out even in a low-income country, then that probably puts a dampener on further research in the US.
I don't think this study is going to provide a knock-out blow to either side, but it could significantly bolster the evidence.
I object to your objection about labeling this as a UBI experiment ;) To my understanding, the fundamental premise of UBI is that it can replace all charitable programmes, be that aid funding or food stamps. The theory is that the recipient of the basic income knows how best to allocate their spending, better than the entity that is making a transfer with strings attached. You may be correct that in practice UBI looks very different in a low-income country than a high-income country, and perhaps also that they may be funded by different types of organization (NGO vs. government), but I think they can meaningfully be called the same thing.
And on the other hand, if all of the predictions of the anti-UBI camp are borne out even in a low-income country, then that probably puts a dampener on further research in the US.
I don't think this study is going to provide a knock-out blow to either side, but it could significantly bolster the evidence.
I object to your objection about labeling this as a UBI experiment ;) To my understanding, the fundamental premise of UBI is that it can replace all charitable programmes, be that aid funding or food stamps. The theory is that the recipient of the basic income knows how best to allocate their spending, better than the entity that is making a transfer with strings attached. You may be correct that in practice UBI looks very different in a low-income country than a high-income country, and perhaps also that they may be funded by different types of organization (NGO vs. government), but I think they can meaningfully be called the same thing.
> if the general claim against UBI is that it will disincentivize work, but we don't measure any disincentivization in this study
The issue is that there's a lot of nuance here. For example, the claim is that a UBI provides less disincentive to work than alternative (especially means-tested) social assistance programs. But it's likely that all social assistance programs provide some disincentive to work, because they inherently increase the viability of not working (or working less). If you compare a UBI with no social assistance at all, the result will be much different than comparing it with something like means-tested food and housing vouchers.
Moreover, the details are important. If instituting a UBI causes some people to choose to work 40 hours a week instead of 80 and spend the extra time with their kids, that is obviously much different than someone who quits their job so they can watch television and play video games. Even if the change in net hours worked is exactly the same.
The issue is that there's a lot of nuance here. For example, the claim is that a UBI provides less disincentive to work than alternative (especially means-tested) social assistance programs. But it's likely that all social assistance programs provide some disincentive to work, because they inherently increase the viability of not working (or working less). If you compare a UBI with no social assistance at all, the result will be much different than comparing it with something like means-tested food and housing vouchers.
Moreover, the details are important. If instituting a UBI causes some people to choose to work 40 hours a week instead of 80 and spend the extra time with their kids, that is obviously much different than someone who quits their job so they can watch television and play video games. Even if the change in net hours worked is exactly the same.
I think that conclusion on it's disincentivation to work would be of value. Currently western society at large thinks that social assistance is a good thing, we have targeted programs like housing assistance, medicaid (or free non-pharma care up here in Canada) and food stamps.
The debate on whether social assistance is a good or bad idea in general will happen orthogonally to the debate on what the best manner to provide that assistance is^1.
1) The camp that believes that social assistance is entirely evil is justified in saying that investing effort into maximizing efficiency of a bad thing is a waste of resources - that's a logical position - but I think that it's more reasonable to research our options. Anything more I could type here would just go into my personal opinions.
The debate on whether social assistance is a good or bad idea in general will happen orthogonally to the debate on what the best manner to provide that assistance is^1.
1) The camp that believes that social assistance is entirely evil is justified in saying that investing effort into maximizing efficiency of a bad thing is a waste of resources - that's a logical position - but I think that it's more reasonable to research our options. Anything more I could type here would just go into my personal opinions.
Nit:
In relation to 'the fundamental premise of UBI is that it can replace all charitable programmes'.
This is not the fundamental premise.
UBI as a financial leveller or as a minimum support value would be a different number to those in different locations and with different conditions.
Location adjusts cost in terms of amenity values (heating, cooling, travel, etc.) - and it is not desirable to clump the population into one location.
Condition causes a large variation in living cost - good health is not cheap, but it is cheaper than many temporary, long term, terminal, or permanent conditions.
Where UBI does not take these into account - which most don't - there would still be a need for charities and other large scale societal funding mechanisms.
In relation to 'the fundamental premise of UBI is that it can replace all charitable programmes'.
This is not the fundamental premise.
UBI as a financial leveller or as a minimum support value would be a different number to those in different locations and with different conditions.
Location adjusts cost in terms of amenity values (heating, cooling, travel, etc.) - and it is not desirable to clump the population into one location.
Condition causes a large variation in living cost - good health is not cheap, but it is cheaper than many temporary, long term, terminal, or permanent conditions.
Where UBI does not take these into account - which most don't - there would still be a need for charities and other large scale societal funding mechanisms.
> To my understanding, the fundamental premise of UBI is that it can replace all charitable programmes, be that aid funding or food stamps.
No. A common belief among UBI proponents is that it is generally superior to most means-tested public benefit programs, but it is neither generally (though some, especially right libertarian, proponents do argue for this) seen as replacing all other social welfare programs, nor is it generally intended by advocates to replace any charity (which is a different thing entirely than government social welfare programs.)
In fact, I would argue that there is no one fundamental premise of UBI, because while it is one broad class of policy conclusion, people come to it from widely divergent premises: the various schools of left-leaning supporters don't share much in terms of premises with right-libertarian supporters, they just have the same answer to very different questions.
No. A common belief among UBI proponents is that it is generally superior to most means-tested public benefit programs, but it is neither generally (though some, especially right libertarian, proponents do argue for this) seen as replacing all other social welfare programs, nor is it generally intended by advocates to replace any charity (which is a different thing entirely than government social welfare programs.)
In fact, I would argue that there is no one fundamental premise of UBI, because while it is one broad class of policy conclusion, people come to it from widely divergent premises: the various schools of left-leaning supporters don't share much in terms of premises with right-libertarian supporters, they just have the same answer to very different questions.
> This is far from the sub-Saharan African context where the economy is still developing and leaders are mulling how best to sustainably extract countries from extreme poverty.
As developing economies continue to develop and pick the lowest-hanging development fruit, it will be interesting to see what happens to these comparisons. I won't be surprised if, in 50 or 100 years, the poorest 5% of the United States is on par with developing countries. By some accounts, that's already kinda-sorta the case [1].
[1] https://www.brookings.edu/wp-content/uploads/2016/06/How-Poo...
As developing economies continue to develop and pick the lowest-hanging development fruit, it will be interesting to see what happens to these comparisons. I won't be surprised if, in 50 or 100 years, the poorest 5% of the United States is on par with developing countries. By some accounts, that's already kinda-sorta the case [1].
[1] https://www.brookings.edu/wp-content/uploads/2016/06/How-Poo...
I think your concerns are valid, but if knowledge about development economics increase, even if it's not applicable to "rich" countries, this is a good thing.
I'm a donor, and they had a program where they gave cash to poor people in Kenia and the people explained what they did with the money. It was a very interesting reading.
For instance, one of the first, and one of the most common, things people bought was a metallic roof for their home in order to fix leaking. That's something that I, in my urban ignorance, would never predict.
Other common investments were: paying the debt with their children's school, a cow, basic furniture or starting a small business.
I'm a donor, and they had a program where they gave cash to poor people in Kenia and the people explained what they did with the money. It was a very interesting reading.
For instance, one of the first, and one of the most common, things people bought was a metallic roof for their home in order to fix leaking. That's something that I, in my urban ignorance, would never predict.
Other common investments were: paying the debt with their children's school, a cow, basic furniture or starting a small business.
True UBI will have to be implemented along with mechanisms where value from automation is integrated with the system - creating a floor for a basic (moving towards good-to-excellent) quality of life for everyone.
> where economic gains and jobs are being automated away from the masses of low-skilled workers and up to the elite of high-skilled workers.
Just want to caveat that people tend to make an umbrella claim that automation is killing low-skilled jobs without considering:
a. the pervasive and increasingly evident effects of globalizing low-skilled jobs and the very real wage growth in poorer territories including but not limited to China
b. that the issue may well be solved by training people so that we have less low-skilled workers (which some argue to be impossible, despite there being no supporting evidence)
Just want to caveat that people tend to make an umbrella claim that automation is killing low-skilled jobs without considering:
a. the pervasive and increasingly evident effects of globalizing low-skilled jobs and the very real wage growth in poorer territories including but not limited to China
b. that the issue may well be solved by training people so that we have less low-skilled workers (which some argue to be impossible, despite there being no supporting evidence)
> that the issue may well be solved by training people so that we have less low-skilled workers
For clarity, do you mean train people so that those truckers become lawyers, software engineers, financial advisors, etcetc?
If so, I feel like at best that is a statement missing a second part. Ie, I don't think existing "high skilled" job markets could handle an influx of what I imagine is at least double the staffing. I imagine it would immediately result in millions of people without jobs, regardless of qualifications.
So the second part of that is, we'd need to drastically expand the available jobs in those "high skilled" markets. And I've got no idea how we'd do that.
What are all those extra software engineers going to work on? What are those extra lawyers going to do? etc.
For clarity, do you mean train people so that those truckers become lawyers, software engineers, financial advisors, etcetc?
If so, I feel like at best that is a statement missing a second part. Ie, I don't think existing "high skilled" job markets could handle an influx of what I imagine is at least double the staffing. I imagine it would immediately result in millions of people without jobs, regardless of qualifications.
So the second part of that is, we'd need to drastically expand the available jobs in those "high skilled" markets. And I've got no idea how we'd do that.
What are all those extra software engineers going to work on? What are those extra lawyers going to do? etc.
At the onset of the Industrial Revolution, I don't imagine people could answer similar questions if asked. If we managed to absorb most of the Western world's farming population into massive cities and created entirely new industries, who's to say the same can't be done now?
A massive part of the planet is still "underdeveloped". As these countries emerge from their eternally-emerging state, there should be no shortage of demand that high-skilled workers in developed countries can capitalize on. Creating intellectual property is an extremely rewarding enterprise and one that can be sold to other less skilled nations (as is already the case).
A massive part of the planet is still "underdeveloped". As these countries emerge from their eternally-emerging state, there should be no shortage of demand that high-skilled workers in developed countries can capitalize on. Creating intellectual property is an extremely rewarding enterprise and one that can be sold to other less skilled nations (as is already the case).
The "universal" part of "Universal Basic Income" is very hard to cover. Maybe it's time to mint "LBI"/"Localized Basic Income" (sounds more like it's addressing the spatial dimension) or "Limited Basic Income" (perhaps covers the temporal dimension better.)
funny thing is... there have already been basic income experiments in north america in the 70s [1]. As far as I know all experiments so far have never shown any substantial negative side effects and tended to show positive effects on work morale, etc. There has just not been the political will to try it on a large scale, yet. Might have to do with the fact that UBI will have a huge impact on the state and its duties. It takes courage for an organization to basically remove what has become a large part of its raison d‘etre.
1: https://en.m.wikipedia.org/wiki/Mincome
1: https://en.m.wikipedia.org/wiki/Mincome
UBI will change nothing. People who could benefit are "tidal"-locked in bad economic dependencies. If you live in a trailer park- and recive UBI- all that happens is that the landowner or landlord raises the rent to meet the new income you recive.
It won't scale like that, costs of living will likely adjust up slightly but your landlord is fighting the grocery store for your additional income, ask too high and they'll lose a tenant.
Inflationary shifts like this have been shown to balance out pretty well and a UBI will reduce the ridiculousness of the income disparity by devaluing highly concentrated wealth.
Inflationary shifts like this have been shown to balance out pretty well and a UBI will reduce the ridiculousness of the income disparity by devaluing highly concentrated wealth.
From TFA:
> “It is easy to have opinions without evidence,” Suri said. “It is time we tried to gather some evidence and started thinking about what the impacts truly are and how it changes people’s lives.”
> “It is easy to have opinions without evidence,” Suri said. “It is time we tried to gather some evidence and started thinking about what the impacts truly are and how it changes people’s lives.”
As someone who is friends who two different social workers and related to someone in family court diversions (think: parents getting their kids taken away and want them back) I can tell you that UBI isn't going to solve much of anything. These people have money to buy alcohol and cigarettes, and yet their kids go hungry and rely on school lunch programs, etc.
Also, I had a brother in law who was a raging alcoholic and stole money from his grade-school kids' piggy banks. He always had money for beer. Asshole. He did the world a favor and hung himself.
For all of them, their personal issues overwhelm their ability to be functional adults. They don't clean their houses, they don't mind their kids, they are addicted to various substances and lie about treatment, recovery, and lie about anything anytime it suits their needs in the moment. It's all lie, lie, lie.
There is nothing a UBI or anything else is going to accomplish for these people and it is a myth to believe that payments without oversight or qualifications will lead to positive outcomes. One would think the US's 50 year experiment with welfare would already provide more than enough data to prove that if you subsidize a behavior you get more of it.
Let people face death, then see how they act. Take their kids away, first, though. It's not the kids' fault their parents are deadbeats.
Also, I had a brother in law who was a raging alcoholic and stole money from his grade-school kids' piggy banks. He always had money for beer. Asshole. He did the world a favor and hung himself.
For all of them, their personal issues overwhelm their ability to be functional adults. They don't clean their houses, they don't mind their kids, they are addicted to various substances and lie about treatment, recovery, and lie about anything anytime it suits their needs in the moment. It's all lie, lie, lie.
There is nothing a UBI or anything else is going to accomplish for these people and it is a myth to believe that payments without oversight or qualifications will lead to positive outcomes. One would think the US's 50 year experiment with welfare would already provide more than enough data to prove that if you subsidize a behavior you get more of it.
Let people face death, then see how they act. Take their kids away, first, though. It's not the kids' fault their parents are deadbeats.
> These people have money to buy alcohol and cigarettes, and yet their kids go hungry and rely on school lunch programs, etc.
Ah yes, let's blame people for their dependence on mind alterning chemicals that if abused build negative feedback loops. While at the same time, those chemicals are touted and lauded in mainstream culture. From rap's "popping bottles" to country's "whiskey makes my girl a little bit frisky".
> For all of them, their personal issues overwhelm their ability to be functional adults.
Doesn't this happen to EVERYONE at some point, temporarily? Where something overwhelms our ability to function. Can you imagine a structure where repeated incidents lead to patterns, and the societal structures we build are not helping to correct those patterns for individuals. Yes, some people will just always make bad choices, but also, some people have never had an opportunity to actually flourish and understand how their choices are not helping. Or even, maybe they are addicted to mind altering chemicals that have literally changed the way they think.
> Let people face death, then see how they act.
If we are sharing anecdotes, my partner works as a therapist with teens with substance abuse problems in the Bronx. I'll never forget the day she called me crying, because one of her 17 year old patients was scared he was going to be attacked leaving the office because he didn't want to join a gang.
He was held up at gun point, had is phone stolen, and his life threatened. You better believe he wants to escape.
Sure, his personal issues are overwhelming his ability to function, but we have to acknowledge that society is not trying to really help him in a serious way because therapy helps, but also economic opportunity as well.
I am an extremely selfish person, and have had great success due to opportunities granted to me through privilege and access. It took a long hard look at myself, to look at someone else, even in the face of addiction, abusive behaviors and acknowledge their personhood and their struggle and say, you are a not able to function, but you are human, and we should try and help.
Ah yes, let's blame people for their dependence on mind alterning chemicals that if abused build negative feedback loops. While at the same time, those chemicals are touted and lauded in mainstream culture. From rap's "popping bottles" to country's "whiskey makes my girl a little bit frisky".
> For all of them, their personal issues overwhelm their ability to be functional adults.
Doesn't this happen to EVERYONE at some point, temporarily? Where something overwhelms our ability to function. Can you imagine a structure where repeated incidents lead to patterns, and the societal structures we build are not helping to correct those patterns for individuals. Yes, some people will just always make bad choices, but also, some people have never had an opportunity to actually flourish and understand how their choices are not helping. Or even, maybe they are addicted to mind altering chemicals that have literally changed the way they think.
> Let people face death, then see how they act.
If we are sharing anecdotes, my partner works as a therapist with teens with substance abuse problems in the Bronx. I'll never forget the day she called me crying, because one of her 17 year old patients was scared he was going to be attacked leaving the office because he didn't want to join a gang.
He was held up at gun point, had is phone stolen, and his life threatened. You better believe he wants to escape.
Sure, his personal issues are overwhelming his ability to function, but we have to acknowledge that society is not trying to really help him in a serious way because therapy helps, but also economic opportunity as well.
I am an extremely selfish person, and have had great success due to opportunities granted to me through privilege and access. It took a long hard look at myself, to look at someone else, even in the face of addiction, abusive behaviors and acknowledge their personhood and their struggle and say, you are a not able to function, but you are human, and we should try and help.
Helping requires some uncomfortable truths to be socially accepted. "It's all lie, lie, lie." the GP said, and he's right -- addicts in the throes of addiction lie. We have to be OK saying, this person is an addict and not really in their right mind. If we treat addiction as a mental illness, then we treat the illness and the lies start to melt away.
Some people think addiction is a moral failing; others think it is an illness. I land on the illness side. Treatment works. We can help people, but it requires throwing away the blind judgement.
Some people think addiction is a moral failing; others think it is an illness. I land on the illness side. Treatment works. We can help people, but it requires throwing away the blind judgement.
> Some people think addiction is a moral failing
That is, at least in my experience, what leads to comments like these: "He did the world a favor and hung himself."
What an incredibly harsh thing to say, especially for a situation that is rarely as clear-cut as "person A is bad therefore they should die."
The uncomfortable truths you mention are like bubbles rising to the top. As a society, we're starting to think about things like alcoholism, drug addiction, childhood abuse, etc. and that will hopefully lead to having fewer of these clear-cut moral judgements. I think UBI will also help, because a lot of these mental traps (bad situation -> abuse -> drugs -> bad situation -> abuse etc.) are magnified by poverty.
What's funny is that some of the pushback against UBI (and welfare) is that same moral judgement. "We shouldn't have UBI because some people will spend it on drugs and alcohol."
That is, at least in my experience, what leads to comments like these: "He did the world a favor and hung himself."
What an incredibly harsh thing to say, especially for a situation that is rarely as clear-cut as "person A is bad therefore they should die."
The uncomfortable truths you mention are like bubbles rising to the top. As a society, we're starting to think about things like alcoholism, drug addiction, childhood abuse, etc. and that will hopefully lead to having fewer of these clear-cut moral judgements. I think UBI will also help, because a lot of these mental traps (bad situation -> abuse -> drugs -> bad situation -> abuse etc.) are magnified by poverty.
What's funny is that some of the pushback against UBI (and welfare) is that same moral judgement. "We shouldn't have UBI because some people will spend it on drugs and alcohol."
> As someone who is friends who two different social workers and related to someone in family court diversions (think: parents getting their kids taken away and want them back) I can tell you that UBI isn't going to solve much of anything.
As someone who is friends with a couple different people who teach critical thinking in college and related to one who does so in high school, I can tell you that this argument-from-loose-contact-with-people-who-unnamed-and-unverifiable-alleged-authoirities involves at least two layers of serious fallacy.
> One would think the US's 50 year experiment with welfare would already provide more than enough data to prove that if you subsidize a behavior you get more of it.
UBI is specifically not about subsidizing behavior; the absence of means- and behavior-testing is what the “U” (either “unconditional” or “universal”) refers to.
As someone who is friends with a couple different people who teach critical thinking in college and related to one who does so in high school, I can tell you that this argument-from-loose-contact-with-people-who-unnamed-and-unverifiable-alleged-authoirities involves at least two layers of serious fallacy.
> One would think the US's 50 year experiment with welfare would already provide more than enough data to prove that if you subsidize a behavior you get more of it.
UBI is specifically not about subsidizing behavior; the absence of means- and behavior-testing is what the “U” (either “unconditional” or “universal”) refers to.
> he absence of means- and behavior-testing is what the “U” (either “unconditional” or “universal”) refers to.
Surely you can't expect the effect of UBI to be the same between, say, cardiologists and minimum-wage workers. The parent's point was that it might subsidize behavior of certain groups more than others, and making UBI universal isn't going to solve that because this isn't a very homogeneous universe.
Surely you can't expect the effect of UBI to be the same between, say, cardiologists and minimum-wage workers. The parent's point was that it might subsidize behavior of certain groups more than others, and making UBI universal isn't going to solve that because this isn't a very homogeneous universe.
> Surely you can't expect the effect of UBI to be the same between, say, cardiologists and minimum-wage workers
Hm. I'd be far more likely to spend my basic income on booze if I were a cardiologist or highly-paid tech worker than if I were a parent barely scraping by.
Top-notch scotch and expensive wines instead of middling whiskeys and passable table wines. Of course, some amount might also be donated/saved/invested. But I'd probably spend a far larger percentage of that base UBI payout on luxuries/vices than your typical out-of-work joe.
> The parent's point was that it might subsidize behavior of certain groups more than others
Not quite. Parent asserts that those behaviors will happen anyways. And that therefore we are more than justified in pulling the carpet out from under those folks (because the money's not going to help anyway).
Playing out this same argument in the context of a cardiologist lets us cut to the heart of the ethical differences between typical pro-UBI and anti-UBI arguments.
Consider the cardiologist is an absent father who squirrels away his money to avoid supporting his family and then spends that money on various vices (luxuries wine collections, absurdly expensive cigars, etc). Is his employer justified in paying a lower salary? Are his customers/debters justified in not paying up? After all, we discontinued social services for the poor booze hound in the earlier scenario!
Most visceral UBI opponents would find that question absurd on face! The money was earned through hard work and education; the employer has no business prying into the employee's personal choices about how to spend his wages, and a customer or debtor refusing to pay is straight-up theft.
Conversely, many visceral UBI supporters point out that the work ethic on display in that reasoning becomes outmoded as work itself becomes outmoded.
If we don't choose some other metric for decision making, and stick to these ethical imperatives, the conversation more-or-less grounds out here.
Hm. I'd be far more likely to spend my basic income on booze if I were a cardiologist or highly-paid tech worker than if I were a parent barely scraping by.
Top-notch scotch and expensive wines instead of middling whiskeys and passable table wines. Of course, some amount might also be donated/saved/invested. But I'd probably spend a far larger percentage of that base UBI payout on luxuries/vices than your typical out-of-work joe.
> The parent's point was that it might subsidize behavior of certain groups more than others
Not quite. Parent asserts that those behaviors will happen anyways. And that therefore we are more than justified in pulling the carpet out from under those folks (because the money's not going to help anyway).
Playing out this same argument in the context of a cardiologist lets us cut to the heart of the ethical differences between typical pro-UBI and anti-UBI arguments.
Consider the cardiologist is an absent father who squirrels away his money to avoid supporting his family and then spends that money on various vices (luxuries wine collections, absurdly expensive cigars, etc). Is his employer justified in paying a lower salary? Are his customers/debters justified in not paying up? After all, we discontinued social services for the poor booze hound in the earlier scenario!
Most visceral UBI opponents would find that question absurd on face! The money was earned through hard work and education; the employer has no business prying into the employee's personal choices about how to spend his wages, and a customer or debtor refusing to pay is straight-up theft.
Conversely, many visceral UBI supporters point out that the work ethic on display in that reasoning becomes outmoded as work itself becomes outmoded.
If we don't choose some other metric for decision making, and stick to these ethical imperatives, the conversation more-or-less grounds out here.
> As someone who is friends who two different social workers and related to someone in family court diversions (think: parents getting their kids taken away and want them back) I can tell you that UBI isn't going to solve much of anything. These people have money to buy alcohol and cigarettes, and yet their kids go hungry and rely on school lunch programs, etc.
An UBI pilot in Madhya Pradesh, India shows exactly the opposite [0]. Villages focused more on healthcare, education involvement improved, frivolous spending decreased, women empowerment was better and personal savings increased.
[0] http://unicef.in/Uploads/Publications/Resources/pub_doc83.pd...
An UBI pilot in Madhya Pradesh, India shows exactly the opposite [0]. Villages focused more on healthcare, education involvement improved, frivolous spending decreased, women empowerment was better and personal savings increased.
[0] http://unicef.in/Uploads/Publications/Resources/pub_doc83.pd...
Not exactly mind blowing stats. Compared to the control group not that much improvement. Furthermore, their living is so low that it is astonishing that the increased stats are so low. Seems like they would benefit more from improved access to a market.
I used social services when broke and in school. I didn't drink and it helped improve my existence greatly. Not everyone is raging alcoholic.
In fact they had a drug screening in FL for unemployment, and like less than 1% of people failed.
In fact they had a drug screening in FL for unemployment, and like less than 1% of people failed.
Any UBI study that doesn't include everyone in a society is not studying "universal" basic income at all. It's just giving some people money. It would be very surprising if this didn't yield positive outcomes for that group.
The big question marks surrounding UBI involve its implementation at a society-wide level. (What are the macroeconomic effects? What if people blow their UBI on dumb things and still end up starving?) Anything short of UNIVERSAL experimentation will not address these.
The big question marks surrounding UBI involve its implementation at a society-wide level. (What are the macroeconomic effects? What if people blow their UBI on dumb things and still end up starving?) Anything short of UNIVERSAL experimentation will not address these.
> It's just giving some people money. It would be very surprising if this didn't yield positive outcomes for that group.
It would be not surprising at all. It all depends on how you give the money and in what context. There are a lot of stories about people winning the lottery or getting an inheritance and ending up broke and in rehab (or worse). There is statistics that only a small percentage of people who found gold in various gold rushes managed to keep it long-term.
There's a concept of "poverty trap", where combination of means-tested welfare programs and wage structure essentially makes stopping being poor unaffordable to the poor, because there's a summary income drop when moving up the scale of earned income, and the person can not afford taking that drop.
There's also a concept of external dependency ruining local business, so that if you flood local marked with foreign aid and money, local businesses can not compete or sustain traditional price/market structure and once they are gone, there's no means to sustain the economy but continuing the stream of foreign aid forever.
Giving people money is not always unquestionably positive, all depends on how. That's why real-life testing is important to know if UBI can work or not.
> Anything short of UNIVERSAL experimentation will not address these.
True but one can argue some insight can be gained from small-scale testing. When we test new drug, we do not test it on every person, even though every person's body is different. We test it on limited set of people, and hope they are representative. Sometimes it fails, but it's better than not having any drugs until we can test it on everyone, isn't it?
It would be not surprising at all. It all depends on how you give the money and in what context. There are a lot of stories about people winning the lottery or getting an inheritance and ending up broke and in rehab (or worse). There is statistics that only a small percentage of people who found gold in various gold rushes managed to keep it long-term.
There's a concept of "poverty trap", where combination of means-tested welfare programs and wage structure essentially makes stopping being poor unaffordable to the poor, because there's a summary income drop when moving up the scale of earned income, and the person can not afford taking that drop.
There's also a concept of external dependency ruining local business, so that if you flood local marked with foreign aid and money, local businesses can not compete or sustain traditional price/market structure and once they are gone, there's no means to sustain the economy but continuing the stream of foreign aid forever.
Giving people money is not always unquestionably positive, all depends on how. That's why real-life testing is important to know if UBI can work or not.
> Anything short of UNIVERSAL experimentation will not address these.
True but one can argue some insight can be gained from small-scale testing. When we test new drug, we do not test it on every person, even though every person's body is different. We test it on limited set of people, and hope they are representative. Sometimes it fails, but it's better than not having any drugs until we can test it on everyone, isn't it?
Not only that, but I don't believe (correct me if I'm wrong) that any UBI skeptics would argue that UBI wouldn't "help" the people who received it in the short-term, like in a 12-year-period, but that it's unsustainable in even the lifetime of a single generation. It's more like social security, which was a great deal for the first generation that started receiving it, but is getting more expensive and less beneficial with each passing year.
The other big question is about the cost side of it. True UBI claims to be able to not be that costly, as it will enable the shut down of all monetary forms of welfare. The resulting unemployment of those employees working welfare related jobs shouldn't even be that concerning, because then the benefit side of UBI would kick in for anyone unemployed. How you study all of that on a small scale is a mystery, as it seems to me that UBI is nearly impossible to bootstrap and will just have to be tried full force at some point with some limited studies as guidance.
It does include everyone but if your income is over a certain amount you don't get anything. It's quite common in tax systems to be exempt or be required depending on your income level. UBI is in addition or on top of your income (if any).
UBI isn't necessarily income in that it's a person's sole income. In my country people get unemployment benefits if they are laid off, welfare if really bad, food banks, dental care for kids under 18, daycare for kids under school age, medical care (but still carry insurance), some school's pay 70% tuition depending on the circumstances.
So really UBI would combine all those into one, if you don't need it that's great but if you do there it is. Sure some people would live off it but it's no different than doing that now.
UBI isn't necessarily income in that it's a person's sole income. In my country people get unemployment benefits if they are laid off, welfare if really bad, food banks, dental care for kids under 18, daycare for kids under school age, medical care (but still carry insurance), some school's pay 70% tuition depending on the circumstances.
So really UBI would combine all those into one, if you don't need it that's great but if you do there it is. Sure some people would live off it but it's no different than doing that now.
I think what the parent is saying is this is just simplified needs-based welfare. Remove the bureaucracy and remove the restrictions on employment status and/or savings. I'm not saying this is bad but I agree it isn't UBI.
I see this argument brought up, a lot, but the problem with it is that it is unfalseifiable.
If UBI is so great, then similar "almost UBI" proposals should ALSO show good results.
I sincerely doubt that there is a magic line between "similar but not UBI" programs and "UBI" programs where the good stuff immediately appears.
If UBI is impossible to test, then we shouldn't do it.
It would be insanely risky to spend trillions of dollars on something that its proponents claim can't be tested. So we should just not implement it in the first place.
If UBI is so great, then similar "almost UBI" proposals should ALSO show good results.
I sincerely doubt that there is a magic line between "similar but not UBI" programs and "UBI" programs where the good stuff immediately appears.
If UBI is impossible to test, then we shouldn't do it.
It would be insanely risky to spend trillions of dollars on something that its proponents claim can't be tested. So we should just not implement it in the first place.
> I sincerely doubt that there is a magic line between "similar but not UBI" programs and "UBI" programs where the good stuff immediately appears.
Maybe, maybe not. But it's pretty clear that an economy or society fits the definition of a complex adaptive system, and it's pretty common knowledge in that field that it's possible for there to be phase change transitions, where effects come suddenly and all at once at a specific level of participation of the independent actors.
Analogies include things like herd immunity, or sensitive dependence on initial conditions in weather forecasting.
Maybe, maybe not. But it's pretty clear that an economy or society fits the definition of a complex adaptive system, and it's pretty common knowledge in that field that it's possible for there to be phase change transitions, where effects come suddenly and all at once at a specific level of participation of the independent actors.
Analogies include things like herd immunity, or sensitive dependence on initial conditions in weather forecasting.
I don't know much about weather but something like herd immunity is definitely testable.
Firstly, even a smallish percentage of immunity would still see population wide benefits.
Secondly, as diseases are transmitted to people physically nearby, this could be tested by immunizing a large percentage of a single population, such as a small town full of people who don't travel much.
If you are truly concerned about the population wide effects of UBI, then you could do something similar, like fund a small poor town, and give EVERYONE in that small town UBI.
Unfortunately, I expect that of such a test were attempted, you'd see the same exact criticism of it, though. It'd probably be something like "you can't see the benefits unless the entire WORLD is on UBI!!!" or some other further doubling down on the unprovability of it all.
My point being, that this scepticism of actually testing the damn thing seems more like a defense mechanism against the possibility of being wrong. It is just the same lazy approach that everyone has for their pet theories, as a way of deflecting any and all criticism by declaring it unfalsefiable
Firstly, even a smallish percentage of immunity would still see population wide benefits.
Secondly, as diseases are transmitted to people physically nearby, this could be tested by immunizing a large percentage of a single population, such as a small town full of people who don't travel much.
If you are truly concerned about the population wide effects of UBI, then you could do something similar, like fund a small poor town, and give EVERYONE in that small town UBI.
Unfortunately, I expect that of such a test were attempted, you'd see the same exact criticism of it, though. It'd probably be something like "you can't see the benefits unless the entire WORLD is on UBI!!!" or some other further doubling down on the unprovability of it all.
My point being, that this scepticism of actually testing the damn thing seems more like a defense mechanism against the possibility of being wrong. It is just the same lazy approach that everyone has for their pet theories, as a way of deflecting any and all criticism by declaring it unfalsefiable
So if we can't test it don't do it... unless of course the case for is Communism where it has been tested and is constantly implemented (despite the terrible results).
Any person that believes they can run a real life experiment with the entire society lives in a special kind of bubble.
I'm not advocating running an "experiment" at the level of an entire society, if that's what you mean. That "experiment" would be the first actual implementation of UBI, if it ever happens.
I do agree, but this seems a step closer than everything else that has been labeled a UBI experiment before.
If anyone has doubts about UBI, consider the great A/B (or rather B/W?) experiment the government ran as part of the New Deal. One group was provided subsidies for housing (analogous to UBI) and another was not - decades later, the initial modest help compounded to leave one group much more prosperous than the other. I'm willing to bet on the outcome of this study.
https://www.npr.org/2017/05/03/526655831/a-forgotten-history...
"African-American families that were prohibited from buying homes in the suburbs in the 1940s and '50s and even into the '60s, by the Federal Housing Administration, gained none of the equity appreciation that whites gained. So ... the Daly City development south of San Francisco or Levittown or any of the others in between across the country, those homes in the late 1940s and 1950s sold for about twice national median income. They were affordable to working-class families with an FHA or VA mortgage. African-Americans were equally able to afford those homes as whites but were prohibited from buying them. Today those homes sell for $300,000 [or] $400,000 at the minimum, six, eight times national median income. ..."
https://www.npr.org/2017/05/03/526655831/a-forgotten-history...
"African-American families that were prohibited from buying homes in the suburbs in the 1940s and '50s and even into the '60s, by the Federal Housing Administration, gained none of the equity appreciation that whites gained. So ... the Daly City development south of San Francisco or Levittown or any of the others in between across the country, those homes in the late 1940s and 1950s sold for about twice national median income. They were affordable to working-class families with an FHA or VA mortgage. African-Americans were equally able to afford those homes as whites but were prohibited from buying them. Today those homes sell for $300,000 [or] $400,000 at the minimum, six, eight times national median income. ..."
What you describe in not UBI, it's discrimination. I think it's pretty clear that if you exclude certain group from preferable markets, and sideline them to be able to buy only second-rate and third-rate goods, then you'll find plenty of examples where they end up at a huge disadvantage. It's not a test of UBI, it's a test of whether restricting access to a market can hurt a group against which it is used. I think we can all agree that the answer to this question is a definite "yes" - but it has no connection with UBI.
Subsidized housing is not UBI. Welfare is not UBI. EBT cards are not UBI.
Also, these guys were just lucky that the government subsidized their homes in SF which experienced a tech boom 50 years later. Now imagine the same in Detroit.
Also, these guys were just lucky that the government subsidized their homes in SF which experienced a tech boom 50 years later. Now imagine the same in Detroit.
I'm not sure if I'm understanding this correctly - maybe I'm missing something significant here, but it says they're giving people 75 cents per day per person? How is ~273 buck a year going to provide any kind of valid measurement? Even at poverty levels of income, you're not talking about an amount of money that reasonably effects anyone's social mobility.
I'm having a hard time understanding how this providing even an academically interesting insight into the effects of UBI.
Am I missing something big here?
From my understand this is going to the poorest of the poor in Kenya, because the median Kenyaian monthly salary is ~800 USD.[1][2] So this UBI experiment does not seem to be for the average population, more as a form of welfare. Still interesting and meaningful research, but not the long term UBI experiment many are waiting for.
[1] http://www.salaryexplorer.com/salary-survey.php?loc=111&loct...
[2] https://duckduckgo.com/?q=80%2C000+KES+in+usd&t=osx&ia=curre...
Edit: Source [1] seems to be unreliable. See below comment: https://news.ycombinator.com/item?id=17013632. So while the number is wrong, it does seem that this UBI is still targeting the poor.
[1] http://www.salaryexplorer.com/salary-survey.php?loc=111&loct...
[2] https://duckduckgo.com/?q=80%2C000+KES+in+usd&t=osx&ia=curre...
Edit: Source [1] seems to be unreliable. See below comment: https://news.ycombinator.com/item?id=17013632. So while the number is wrong, it does seem that this UBI is still targeting the poor.
The figure from the above website is wrong. US$800 per month is in the upper middle-income territory but Kenya is still a lower middle-income nation.
https://qz.com/635952/kenyas-goal-of-being-an-upper-middle-i...
Kenya's GDP per capita was around $1143 or less than $100 per month in 2016. "The average monthly wage in Kenya is 6,498 shillings ($76).", according to Reuters in 2013.
https://tradingeconomics.com/kenya/gdp-per-capita
https://www.reuters.com/article/us-kenya-reform-idUSBRE94R0M...
This means that the basic income ($22.5 per month or ~20-30% of national median salary) to be provided to Kenyans should account for a substantial part of their income and the experiment could become a basis for an analysis of basic income effects in certain communities.
https://qz.com/635952/kenyas-goal-of-being-an-upper-middle-i...
Kenya's GDP per capita was around $1143 or less than $100 per month in 2016. "The average monthly wage in Kenya is 6,498 shillings ($76).", according to Reuters in 2013.
https://tradingeconomics.com/kenya/gdp-per-capita
https://www.reuters.com/article/us-kenya-reform-idUSBRE94R0M...
This means that the basic income ($22.5 per month or ~20-30% of national median salary) to be provided to Kenyans should account for a substantial part of their income and the experiment could become a basis for an analysis of basic income effects in certain communities.
Thanks, somehow I missed that, this makes much more sense but then raises some fundamental questions regarding the potential pigeon holing of UBI as a tool whose efficacy is primarily shaped by the state of the economy in which it is deployed (ie this study is highly dependent on the underlying economy being that of a severely under developed nation state).
Maybe I'm being slightly too cynical, but that's pretty much inevitable. A great deal more "scientific knowledge" than you'd probably be entirely comfortable with knowing involves taking a point sample of some space and applying it way, way away from where the sample was actually taken. If this study succeeds, then you can expect the HN commentariat to be citing how BI has been scientifically proved to be a good idea until the end of time, and if this study fails, the opposite.
Even better, there's really two types of BI going on here. One is as a mechanism for poverty alleviation, by getting capital to people who have none. Not just "not much", but none. The other is as a solution to the as-yet mostly future problem of the work force being automated out of existence in every industry that people below a certain IQ threshold can work productively in. Expect those to be conflated freely, even though in my opinion they're two different problems. (If you squint really hard, yes, they blur together, but don't ignore the fact that you're squinting.)
Even better, there's really two types of BI going on here. One is as a mechanism for poverty alleviation, by getting capital to people who have none. Not just "not much", but none. The other is as a solution to the as-yet mostly future problem of the work force being automated out of existence in every industry that people below a certain IQ threshold can work productively in. Expect those to be conflated freely, even though in my opinion they're two different problems. (If you squint really hard, yes, they blur together, but don't ignore the fact that you're squinting.)
As one of the likely cheerleaders, without the tax credit, it’s not UBI. (In my humble opinion)
This is pure charity.
What do you mean by pigeon holing here? I don't understand what are the variables and what is the value space. (No disrespect, just trying to understand.)
$148 USD in HCMC [1], which is a modern city.
[1] https://www.google.com/search?q=vietnam+average+salary
[1] https://www.google.com/search?q=vietnam+average+salary
I'd assume that a UBI study like this would start with having people suddenly not being forced to work to survive, or do anything for that matter, while looking at how their lives change over the course of at least a year. Without any kind of guidance I'd expect a fast descent into apathy and lethargy with most people.
This contra-UBI argument is often made, but I find it a bit short-sighted. Instead of having "survival" or "career" as a overarching goal in life, (some) people will have to find their own purpose in life. It's a bigger challenge but I believe in human adaptability. The question is how painful it will be initially and how long it will take for people to settle in this new mindset.
This is essentially my viewpoint as well. To mitigate the effects during the transition period I imagine some kind of social service in place where people can spend a lot of time learning to adapt to this new lifestyle.
Would YOU quit your job and descend into apathy and lethargy?
You're saying you'd PREFER to be poor?
Centuries of human history shows that most people choose not to be poor, if at all possible. Many go to great lengths to avoid it.
Centuries of human history shows that most people choose not to be poor, if at all possible. Many go to great lengths to avoid it.
> Centuries of human history shows that most people choose not to be poor, if at all possible.
And it's not just “poor vs. not poor”; a substantial share of the people who have the capacity to be rich without much effort expend additional effort to be more rich, if there are opportunities to do so.
And it's not just “poor vs. not poor”; a substantial share of the people who have the capacity to be rich without much effort expend additional effort to be more rich, if there are opportunities to do so.
Some do. Some are quite contented.
Since I don't have to worry about a basic income (online business, not part of some experiment) i do a lot more for me, society and my future income.
Therefore I highly believe also other people would adapt this way given a real chance.
Therefore I highly believe also other people would adapt this way given a real chance.
I'm not sure if this played into the researchers decisions, but giving a small but meaningful amount of money to very low income people allows you to increase the size and duration of a study for a given level of research funding. many low wage workers live on a dollar a day or less, I think wages for textile workers in Vietnam for ex are $2 a day, and poverty levels in Africa are even lower
If instead they gave $40k / year to people in the US, they could only fund 625 person-years. So this design would limit the ability to predict how UBI would work in the US, but 1) provides help to those who need it most and 2) maximizes your sample size
If instead they gave $40k / year to people in the US, they could only fund 625 person-years. So this design would limit the ability to predict how UBI would work in the US, but 1) provides help to those who need it most and 2) maximizes your sample size
So after spending $25M we still won't know if UBI would work in the US. And we won't know if UBI works for middle class.
Also considering inflation and the weakening of the US dollar and theyre getting even less. There are so many environmental variables as well, especially over such a large time frame. It will definitely be hard to find a strong signal through all that noise. They need to go big or go home with this kind of experiment.
Well, the dollar is up about 80% against the Kenyan Shilling over the past ten years. Even if the dollar weakens in the coming years the local currency may fare worse.
Checking into Kenyan living wage numbers from a few sources, it looks like this would be no more than 10%-15% of a living wage.
As with most economic questions, science is very difficult and limited in what it can tell us.
That's because economics is a social science, and you never know exactly how people are going to react. A study of one culture might not apply to another, and a study in one timeframe might not apply to another.
So we will probably see a lot of "hmmm... that's interesting" kinds of things that might not be repeatable. And lots of good and bad effects may be unmeasured or unmeasurable.
That's because economics is a social science, and you never know exactly how people are going to react. A study of one culture might not apply to another, and a study in one timeframe might not apply to another.
So we will probably see a lot of "hmmm... that's interesting" kinds of things that might not be repeatable. And lots of good and bad effects may be unmeasured or unmeasurable.
Your claim is also largely true for drug trials. There is also huge variability due to genetics, cultural placebo response, variations in diet among cultures, cultural or individual symptom expression, and so on. Every science faces an enormous amount of confounding variables.
Doesn't mean we should stop doing drug trials, or economic trials in this case. Well designed experiments can be informative, even though care must be taken to generalize them.
Doesn't mean we should stop doing drug trials, or economic trials in this case. Well designed experiments can be informative, even though care must be taken to generalize them.
>Your claim is also largely true for drug trials. There is also huge variability due to genetics, cultural placebo response, variations in diet among cultures, cultural or individual symptom expression, and so on.
I work in pharma (biologicals) - though not as a scientist - and you're overstating the differences. The genetic variance of humans is within a very narrow band. The superficial differences are not relevant to the vast majority of pharmaceutical products. In any case, how our human biology reacts to pharmaceutical substances is VASTLY different from humans' economic and social interactions. You know to a very high degree of certainty how an antigen will produce an immune response much much more than how pricing your headphones at 50 dollars will get you more customers, or raising wages by 10% will give you a 20% increase in productivity.
>Every science faces an enormous amount of confounding variables.
I don't think (macro)economics/human psychology are sciences. Aside from my own opinion, it is certainly debatable - Unlike biology and physics which are firmly in the science camp.
I work in pharma (biologicals) - though not as a scientist - and you're overstating the differences. The genetic variance of humans is within a very narrow band. The superficial differences are not relevant to the vast majority of pharmaceutical products. In any case, how our human biology reacts to pharmaceutical substances is VASTLY different from humans' economic and social interactions. You know to a very high degree of certainty how an antigen will produce an immune response much much more than how pricing your headphones at 50 dollars will get you more customers, or raising wages by 10% will give you a 20% increase in productivity.
>Every science faces an enormous amount of confounding variables.
I don't think (macro)economics/human psychology are sciences. Aside from my own opinion, it is certainly debatable - Unlike biology and physics which are firmly in the science camp.
This is very true, but it's also true that the inappropriate generalisation of this experiment seems to have started with the press release!
If somebody announced a drug test that didn't look at symptoms or benchmark against placebo effects was "testing a new cure", people would rightly point out it was doing no such thing, just as an evaluation of how people in extreme poverty react to charitable handouts doesn't really tell us much about the effects of redesigning the Western welfare state on UBI principle that taxpayers really ought to subsidise wealthy early retirees and housewives on exactly the same basis they subsidise the desperately seeking work and disabled.
If somebody announced a drug test that didn't look at symptoms or benchmark against placebo effects was "testing a new cure", people would rightly point out it was doing no such thing, just as an evaluation of how people in extreme poverty react to charitable handouts doesn't really tell us much about the effects of redesigning the Western welfare state on UBI principle that taxpayers really ought to subsidise wealthy early retirees and housewives on exactly the same basis they subsidise the desperately seeking work and disabled.
https://en.wikipedia.org/wiki/Basic_income
The concepts of social welfare really make me want to visit the Scandinavian nations to see how they get it right and how it is compatible with their their social culture.
As an American I really don't see social welfare working the US without dramatic shifts in the social culture.
I also see taxation as a huge factor. The US needs to eliminate income tax in favor of other tax programs. The state of Texas has high property taxes but no state income tax and the results to the state economy are fantastic. Wealthy people can deduct all manners of things from income taxes, but there are exceedingly few deductions from property taxes. It naturally punishes the wealthy more, such as the goals of a graduated income tax, since it is a percentage set by the local city against the value of the property. People who do not own property do not pay property taxes, so less wealthy people are naturally excused from such taxation.
Property prices in Texas are generally low compared to much of the rest of the country, which means more people are capable of owning property and thus contributing to property taxes. For example the value of my house in Texas is the equivalent of the minimum down payment for a similarly sized house in California, which I could never afford.
With a universal basic income more people would be capable of owning property, thus having a higher standard of living, and also thus further contributing to property taxes.
The concepts of social welfare really make me want to visit the Scandinavian nations to see how they get it right and how it is compatible with their their social culture.
As an American I really don't see social welfare working the US without dramatic shifts in the social culture.
I also see taxation as a huge factor. The US needs to eliminate income tax in favor of other tax programs. The state of Texas has high property taxes but no state income tax and the results to the state economy are fantastic. Wealthy people can deduct all manners of things from income taxes, but there are exceedingly few deductions from property taxes. It naturally punishes the wealthy more, such as the goals of a graduated income tax, since it is a percentage set by the local city against the value of the property. People who do not own property do not pay property taxes, so less wealthy people are naturally excused from such taxation.
Property prices in Texas are generally low compared to much of the rest of the country, which means more people are capable of owning property and thus contributing to property taxes. For example the value of my house in Texas is the equivalent of the minimum down payment for a similarly sized house in California, which I could never afford.
With a universal basic income more people would be capable of owning property, thus having a higher standard of living, and also thus further contributing to property taxes.
> People who do not own property do not pay property taxes, so less wealthy people are naturally excused from such taxation.
The less wealthy have those property taxes rolled into their monthly rent, so I fail to see how you can make that claim.
The less wealthy have those property taxes rolled into their monthly rent, so I fail to see how you can make that claim.
It should be evident that if the alternative is paying rent AND income taxes, then the less wealthy are relatively better off in the case of no income taxes.
There's a lot to unpack here, some of which other comments have gotten to.
First off, why are property taxes the best choice in taxation? Why is taxing the rich more than the poor bad theory? Taxes, as a general rule and in theory, are meant to pull money from the citizenry in order to fund "public good" projects through the government (i.e. you get taxed by the state, the state the funds a school and builds a road). It would make sense that UBI would need to come from the state, and would therefor be paid by taxation of someone. Many proponents of UBI suggest the taxation be focused more on the producers/corporation instead of the individual citizens. This feels more logical than giving someone a UBI pulled from taxes and then taxing them on that UBI.
On the topic of home ownership: This is an extremely complex game that mostly relates to the A: supply of housing and B: proximity of jobs to a specific location. The reason San Francisco has such insane housing prices is that there are also a large number of high paying jobs. Those jobs allow people working in that area to pay more for goods/services, which allows them to push up the price of housing in the area. If you suddenly had a large number of people able to enter the housing market all at once without any change in the supply of homes, you would likely see market prices fluctuate heavily for some period until things stabilized at a price higher than the current market price.
In addition, there have been approximately 10,000 articles/threads debating the virtues of home ownership vs renting. There are distinct advantages to both, and claiming that home ownership itself contributes to higher standard of living completely ignores the lessons of economic ruin brought on by the last housing collapse, which could happen again in your scenario since you're still assuming buyers are paying for their homes. If home values rise with the inflation that would likely be associated with the introduction of a UBI, it's entirely reasonable that people would still be capable of accruing too much debt and entering dangerous borrowing behaviors.
I'm a huge fan of a UBI, and feel that it will likely be required at some point in the next 100-150 years, but it also feels like the idea you're describing is a half measure that doesn't address many of the issues a UBI is meant to address.
First off, why are property taxes the best choice in taxation? Why is taxing the rich more than the poor bad theory? Taxes, as a general rule and in theory, are meant to pull money from the citizenry in order to fund "public good" projects through the government (i.e. you get taxed by the state, the state the funds a school and builds a road). It would make sense that UBI would need to come from the state, and would therefor be paid by taxation of someone. Many proponents of UBI suggest the taxation be focused more on the producers/corporation instead of the individual citizens. This feels more logical than giving someone a UBI pulled from taxes and then taxing them on that UBI.
On the topic of home ownership: This is an extremely complex game that mostly relates to the A: supply of housing and B: proximity of jobs to a specific location. The reason San Francisco has such insane housing prices is that there are also a large number of high paying jobs. Those jobs allow people working in that area to pay more for goods/services, which allows them to push up the price of housing in the area. If you suddenly had a large number of people able to enter the housing market all at once without any change in the supply of homes, you would likely see market prices fluctuate heavily for some period until things stabilized at a price higher than the current market price.
In addition, there have been approximately 10,000 articles/threads debating the virtues of home ownership vs renting. There are distinct advantages to both, and claiming that home ownership itself contributes to higher standard of living completely ignores the lessons of economic ruin brought on by the last housing collapse, which could happen again in your scenario since you're still assuming buyers are paying for their homes. If home values rise with the inflation that would likely be associated with the introduction of a UBI, it's entirely reasonable that people would still be capable of accruing too much debt and entering dangerous borrowing behaviors.
I'm a huge fan of a UBI, and feel that it will likely be required at some point in the next 100-150 years, but it also feels like the idea you're describing is a half measure that doesn't address many of the issues a UBI is meant to address.
> Why is taxing the rich more than the poor bad theory?
The idea is that basic living expenses do not wildly differ between the poor and the wealthy. Think of things like clothes, child care, and food. After accounting for basic living expenses as a proportion of total regular compensation poorer people will have less remaining capital than wealthy people. It is this greatly increased remaining capital, disposable income, that allows wealthy people to purchase extravegant trifles. Taxing that purchasing potential punishes people, wealth returned to the state, in proportion to their purchasing capability without consideration for exemptions.
Wealth consolidated to personal holdings is ripe for taxation and isn't necessarily returned to the public unless gifted as charitable contributions. There are social arguments both ways to that separate discussion.
Taxing businesses is not straight forward. Business benefit their local economies unless large enough to invest into different geographic markets. Local geographies generally want to not tax businesses whose capital is tied to local vicinities as they are economic stimulators. On the other hand they generally want to tax larger businesses highly on capital leaving the local vicinity. It is challenging to write a business tax policy that isn't discriminatory and simultaneously free from local economic constraints. These arguments largely do not apply to wealthy individuals.
> On the topic of home ownership: This is an extremely complex game that mostly relates to the A: supply of housing and B: proximity of jobs to a specific location. The reason San Francisco has such insane housing prices is that there are also a large number of high paying jobs.
That argument loses steam outside the Bay Area. The Bay Area is not unique with regard to a cluster of high paying jobs. Housing prices don't escape the basic economic principles of supply/demand merely because high paying jobs are present. For pricing to become an order of magnitude more expensive other factors must be present, such as limited supply and artificial constraints.
There are many favorable reasons to rent opposed to ownership, but that discussion is orthogonal to discussions of property taxes.
In order for UBI to be a favorable enhancement it must exist as an economic stimulator rather than a poverty eradicator. Poverty is corrosive, stressful, and burdensome. If a UBI were present just enough to free people to make more meaningful employment and financial decisions than it is a favorable stimulator of employment and education. If, on the other hand, it merely exists to cure the ills of homelessness and hopelessness as a welfare system it may become a compromised system for enabling less economic contribution in impoverished social contexts.
Many welfare systems have existed in the past that sometimes work well and sometimes make things worse. A UBI isn't going to eliminate payday loans or prevent people from spending all their money at casinos, but it will likely allow many people to pursue new career choices or skills they would have otherwise not considered.
The idea is that basic living expenses do not wildly differ between the poor and the wealthy. Think of things like clothes, child care, and food. After accounting for basic living expenses as a proportion of total regular compensation poorer people will have less remaining capital than wealthy people. It is this greatly increased remaining capital, disposable income, that allows wealthy people to purchase extravegant trifles. Taxing that purchasing potential punishes people, wealth returned to the state, in proportion to their purchasing capability without consideration for exemptions.
Wealth consolidated to personal holdings is ripe for taxation and isn't necessarily returned to the public unless gifted as charitable contributions. There are social arguments both ways to that separate discussion.
Taxing businesses is not straight forward. Business benefit their local economies unless large enough to invest into different geographic markets. Local geographies generally want to not tax businesses whose capital is tied to local vicinities as they are economic stimulators. On the other hand they generally want to tax larger businesses highly on capital leaving the local vicinity. It is challenging to write a business tax policy that isn't discriminatory and simultaneously free from local economic constraints. These arguments largely do not apply to wealthy individuals.
> On the topic of home ownership: This is an extremely complex game that mostly relates to the A: supply of housing and B: proximity of jobs to a specific location. The reason San Francisco has such insane housing prices is that there are also a large number of high paying jobs.
That argument loses steam outside the Bay Area. The Bay Area is not unique with regard to a cluster of high paying jobs. Housing prices don't escape the basic economic principles of supply/demand merely because high paying jobs are present. For pricing to become an order of magnitude more expensive other factors must be present, such as limited supply and artificial constraints.
There are many favorable reasons to rent opposed to ownership, but that discussion is orthogonal to discussions of property taxes.
In order for UBI to be a favorable enhancement it must exist as an economic stimulator rather than a poverty eradicator. Poverty is corrosive, stressful, and burdensome. If a UBI were present just enough to free people to make more meaningful employment and financial decisions than it is a favorable stimulator of employment and education. If, on the other hand, it merely exists to cure the ills of homelessness and hopelessness as a welfare system it may become a compromised system for enabling less economic contribution in impoverished social contexts.
Many welfare systems have existed in the past that sometimes work well and sometimes make things worse. A UBI isn't going to eliminate payday loans or prevent people from spending all their money at casinos, but it will likely allow many people to pursue new career choices or skills they would have otherwise not considered.
I still don't think you've explained how shifting solely to property taxation and away from overall income taxation would work. Your point appeared to be that rich people are better able to exploit the tax code, and I don't see how that would change by shifting to just taxing property. Why not just have large income reserves and not invest in real estate? Why not just get lawyers to better help you exploit the property tax code?
Taxing as a whole is not straight forward. But the idea is that you put a greater tax burden on corporate profits, prohibiting the accumulation of wealth by those who are already in possession of wealth. It's basically half-assed state-seizure of industry to make it palatable to the capitalists.
>Housing prices don't escape the basic economic principles of supply/demand merely because high paying jobs are present. For pricing to become an order of magnitude more expensive other factors must be present, such as limited supply (Emphasis mine)
It's not escaping supply and demand. There is greater demand than supply. This is also common in other urban areas across the country (see New York, Miami, etc) which are large job markets. SF is just particularly bad because of how poorly they address the issues.
>If, on the other hand, it merely exists to cure the ills of homelessness and hopelessness as a welfare system it may become a compromised system for enabling less economic contribution in impoverished social contexts.
Who cares? "From each according to his ability, to each according to his need." This isn't about getting the best economic value from the citizens. It's about taking care of other humans. The whole concept of giving people just enough to not starve but not enough to be satisfied seems like bourgeoisie nonsense to keep a lower working class.
You either destroy the capitalist paradigm, or you exploit people. There is no middle ground.
Taxing as a whole is not straight forward. But the idea is that you put a greater tax burden on corporate profits, prohibiting the accumulation of wealth by those who are already in possession of wealth. It's basically half-assed state-seizure of industry to make it palatable to the capitalists.
>Housing prices don't escape the basic economic principles of supply/demand merely because high paying jobs are present. For pricing to become an order of magnitude more expensive other factors must be present, such as limited supply (Emphasis mine)
It's not escaping supply and demand. There is greater demand than supply. This is also common in other urban areas across the country (see New York, Miami, etc) which are large job markets. SF is just particularly bad because of how poorly they address the issues.
>If, on the other hand, it merely exists to cure the ills of homelessness and hopelessness as a welfare system it may become a compromised system for enabling less economic contribution in impoverished social contexts.
Who cares? "From each according to his ability, to each according to his need." This isn't about getting the best economic value from the citizens. It's about taking care of other humans. The whole concept of giving people just enough to not starve but not enough to be satisfied seems like bourgeoisie nonsense to keep a lower working class.
You either destroy the capitalist paradigm, or you exploit people. There is no middle ground.
What makes you think Scandinavian nations got it right? I think it's a myth, albeit quite popular.
IMHO, they should compare their results with Kiva. Kiva provides zero-interest loans, so donations are not wasted, but used to create sustainable economic society.
Give fishing rod, not a fish.
https://www.kiva.org/
Give fishing rod, not a fish.
https://www.kiva.org/
I'm not responsible for the downvote, but it's worth pointing out that whilst Kiva donors do not receive interest, most Kiva loan recipients pay relatively enormous interest rates (administering loans is expensive, even for the microfinance institutes which aren't trying to make a profit). There are undoubtedly beneficiaries who make good use of the credit, but also some losers and question marks about how sustainable it actually is...
FWIW there's also YC's Zidisha in the microlending market which cuts out the middleman (but still charges interest)
FWIW there's also YC's Zidisha in the microlending market which cuts out the middleman (but still charges interest)
AFAIK, most of these money staying in the country, creating additional flow, so I see no problem with that. It's much easier to return money, when you have business.
For example, I heard about 3d printer group with rule: we give you 3d printer printed parts for free, but, when you will assemble your own printer, you must print 2 kits and donate them to others. From consumer perspective, it's 100% of interest, but from 3d printer hobbyst perspective, it's not a problem at all, because they will have printer, which will print them parts. Business is like a printer for money.
Positive outcome is not guaranteed, of course, but fear of loss, as shown by some losers, drives majority to success.
For example, I heard about 3d printer group with rule: we give you 3d printer printed parts for free, but, when you will assemble your own printer, you must print 2 kits and donate them to others. From consumer perspective, it's 100% of interest, but from 3d printer hobbyst perspective, it's not a problem at all, because they will have printer, which will print them parts. Business is like a printer for money.
Positive outcome is not guaranteed, of course, but fear of loss, as shown by some losers, drives majority to success.
>Give fishing rod, not a fish.
I know you're speaking pretty abstractly, but let me run with it for a bit to illustrate the case for basic income:
Better yet, is give money and let the person decide whether to buy a fishing rod or a fish. Which one is better depends on a lot of uncertain and hard to observe (for an outsider) factors like:
* how badly an immediate fish is needed
* how viable is it for the person to learn to fish?
* how useful a fishing rod would be given the environment (people close to a river that has lots of fish probably have more use for a fishing rod)
* what the opportunity cost of a person's time is (if they have another good alternative job then they would logically prefer the fish as supplementary income rather than a fishing rod which must replace their old job)
I know you're speaking pretty abstractly, but let me run with it for a bit to illustrate the case for basic income:
Better yet, is give money and let the person decide whether to buy a fishing rod or a fish. Which one is better depends on a lot of uncertain and hard to observe (for an outsider) factors like:
* how badly an immediate fish is needed
* how viable is it for the person to learn to fish?
* how useful a fishing rod would be given the environment (people close to a river that has lots of fish probably have more use for a fishing rod)
* what the opportunity cost of a person's time is (if they have another good alternative job then they would logically prefer the fish as supplementary income rather than a fishing rod which must replace their old job)
From my own experience, when I'm hungry, I will think about food and nothing else, so I will be biased. For my own good, it's better to manage my money by somebody with no bias.
Loans are shifting my perspective: if I will eat that fish today, how I will return that fish? I will not event think about that when I have a food for free.
Loans are shifting my perspective: if I will eat that fish today, how I will return that fish? I will not event think about that when I have a food for free.
Whatever you think of UBI, you won’t be able to point at the results of this study and make any compelling argument that UBI works or doesn’t work.
For UBI to be tested effectively it would, at a minimum, need be implemented at a national level and include everyone in that nation.
For one, that is the only way to see the macro economic effects. Second, in this study the money falls from the sky. No one is being taxed to pay for the UBI nor is the currency being debased.
In any case, if it works, people like me will point to these flaws. If it doesn’t work, the pro-UBI camp will have their set of flaws to argue.
Finally, this study seems to suggest that ‘success’ is determined by what percent of people on UBI work. Instead they should be measuring people’s standard of living improvement, if they work or not.
For UBI to be tested effectively it would, at a minimum, need be implemented at a national level and include everyone in that nation.
For one, that is the only way to see the macro economic effects. Second, in this study the money falls from the sky. No one is being taxed to pay for the UBI nor is the currency being debased.
In any case, if it works, people like me will point to these flaws. If it doesn’t work, the pro-UBI camp will have their set of flaws to argue.
Finally, this study seems to suggest that ‘success’ is determined by what percent of people on UBI work. Instead they should be measuring people’s standard of living improvement, if they work or not.
For those who are not aware, GiveDirectly is a charity, not some kind of government agency. If you are pro-UBI, put your money where your mouth is and help with the experiment by donating.
It's quite possible to be pro-UBI but not think that exogenous charity provides a decent model for studying UBI, which is an endogenous transfer program, or that Kenya is a relevant model for the kind of places one is most concerned about implementing UBI.
> People who advocate for a universal basic income say it will be a way to pull people out of poverty. Skeptics think a universal basic income will act as a disincentive for people to work.
IME, advocates tend to say it is a better way of alleviating the symptoms of poverty than means-tested benefit programs and that, compared to means tested programs, it provides greater ability to take advantage of (and less disincentives to) other existing means of lifting oneself out of poverty in the developed world.
And skeptics and advocates both agree that it will reduce economic compulsion to work, but advocates argue that the reduction to structural disincentives and barriers to development and outside income involved in both means-tested aid programs and the trap that is necesssry-but-dead-end work would outweigh that in the conditions prevailing in the developed world.
While it may be certainly interesting to study the different models of exogenous aid provided in the study here, I don't think it's particularly relevant, other than tangentially, to the core arguments regarding UBI because the design is wrong and the environment is wrong, and should not be viewed as a study of UBI so much as a study of charity models which might have some incidental relevance in discussions of UBI.
IME, advocates tend to say it is a better way of alleviating the symptoms of poverty than means-tested benefit programs and that, compared to means tested programs, it provides greater ability to take advantage of (and less disincentives to) other existing means of lifting oneself out of poverty in the developed world.
And skeptics and advocates both agree that it will reduce economic compulsion to work, but advocates argue that the reduction to structural disincentives and barriers to development and outside income involved in both means-tested aid programs and the trap that is necesssry-but-dead-end work would outweigh that in the conditions prevailing in the developed world.
While it may be certainly interesting to study the different models of exogenous aid provided in the study here, I don't think it's particularly relevant, other than tangentially, to the core arguments regarding UBI because the design is wrong and the environment is wrong, and should not be viewed as a study of UBI so much as a study of charity models which might have some incidental relevance in discussions of UBI.
Didn’t Finland just roll their UBI experiment back?
If I remember correctly they tried it on the small sample it didn’t have a meaningful impact and they calculated it would be too expensive to try the whole country, but I could be meant remembering wrong.
If I remember correctly they tried it on the small sample it didn’t have a meaningful impact and they calculated it would be too expensive to try the whole country, but I could be meant remembering wrong.
Yes, you did read that:
http://www.bbc.com/news/world-europe-43866700
Though there was an attempt to walkback or reframe that article:
http://www.kela.fi/web/en/-/contrary-to-reports-the-basic-in...
http://www.bbc.com/news/world-europe-43866700
Though there was an attempt to walkback or reframe that article:
http://www.kela.fi/web/en/-/contrary-to-reports-the-basic-in...
> Finland's two-year pilot scheme started in January 2017.. But it will not be extended after this year
Sounds slightly different than the parent's phrasing -- the trial was not "walked back", they just decided not to invest more money in it.
Given that the research hasn't been completed, it seems perfectly reasonable for the government to decline to extend the trial; I'd think it sensible to wait until they have analyzed the results before making any decisions (unless they have already seen some early data).
> "The employment effects across the whole experiment will be available by the end of 2019 or at the beginning of 2020."
Sounds slightly different than the parent's phrasing -- the trial was not "walked back", they just decided not to invest more money in it.
Given that the research hasn't been completed, it seems perfectly reasonable for the government to decline to extend the trial; I'd think it sensible to wait until they have analyzed the results before making any decisions (unless they have already seen some early data).
> "The employment effects across the whole experiment will be available by the end of 2019 or at the beginning of 2020."
One of the big differences between the experiments that Finland did and actual UBI is that UBI is supposed to replace all kinds of monetary welfare. It sounds like the experiments in Finland failed because of the cost, but it's really hard to try that small scale, because many of the cost benefits of full scale UBI come from being able to shut down all of the overhead of various welfare programs.
The potential savings from shutting down welfare programmes would be fairly easy to calculate, though.
No, they just haven't expanded it. I also think that the finish experiment has two main problems: they only give money to the unemployed, and they are only interested in measuring whether this leads to more employment. Seems almost cynical that they are not interested in other possible outcomes, such as benefits for unpaid work, family or health.
No, it's continuing until its planned end date.
http://www.kela.fi/web/en/-/contrary-to-reports-the-basic-in...
http://www.kela.fi/web/en/-/contrary-to-reports-the-basic-in...
I'd like welfare to be a system that gives people food, shelter, clothing and hygiene rather than "free money".
also that shelter would allow people to run a business without fear of that free stuff being removed from under them.
it would help battered wives/husbands and young adults get on their feet.
would also help governments build those desperately needed (communal) homes that they promise.
also that shelter would allow people to run a business without fear of that free stuff being removed from under them.
it would help battered wives/husbands and young adults get on their feet.
would also help governments build those desperately needed (communal) homes that they promise.
motivation to work is non linear. With low UBI amounts people dont starve, but still have incentive to work. One of the biggest problems with welfare in the US is that you lose benefits that are equal or greater to the amount you make from work, when you start to work, so there is a huge disincentive to work.
If UBI was implemented in the US, 100K would make most people lazy and have them drop out from the workforce, but would 5K?
A more likely outcome is inflation which results in whatever dollar amount the UBI starts as, effectively moving close to $0 as prices rise.
If UBI was implemented in the US, 100K would make most people lazy and have them drop out from the workforce, but would 5K?
A more likely outcome is inflation which results in whatever dollar amount the UBI starts as, effectively moving close to $0 as prices rise.
Someone always brings up this inflation argument in these threads, where does it come from? It does not increase the amount of money in circulation. It's just like other forms of income transfers.
Monetary inflation is not the only source of inflation. There is also cost inflation. If renters suddenly have additional disposable income, landlords will raise the rent to absorb the additional disposable income. And the same with housing buyers and sellers. Unless there is a mass migration from urban to rural areas, there will be a cost inflation that exactly equals the additional disposable income.
Cost of living adjustments will just make things worse. Annual increases in the basic income adjusted to inflation will cause an inflationary spiral and eventually hyperinflation. This is not a minor concern.
Cost of living adjustments will just make things worse. Annual increases in the basic income adjusted to inflation will cause an inflationary spiral and eventually hyperinflation. This is not a minor concern.
Of course some prices will rise and some will fall, because the new taxes will reduce income from different consumers than the biggest beneficisries are. If we want to prevent any price rises of poor people's products, this same argument could be used again any improvement in poverty / income equality, whether market based or income transfer based.
If this is the wrong direction, should we make opposite changes - concentrate wealth in fewer hands?
Anyway, in general it is not the case that prices would rise to consume all citizens' disposable income, foreastallyng all improvement in living standards. Your comment seems to conflate localized price changes with total real change stopping inflation, without justification.
If this is the wrong direction, should we make opposite changes - concentrate wealth in fewer hands?
Anyway, in general it is not the case that prices would rise to consume all citizens' disposable income, foreastallyng all improvement in living standards. Your comment seems to conflate localized price changes with total real change stopping inflation, without justification.
> this same argument could be used again any improvement in poverty
UBI is particularly susceptible because it is a one-time universal increase in income. The increaes is very predictable by landlords and housing sellers.
> If this is the wrong direction, should we make opposite changes - concentrate wealth in fewer hands?
Means-tested welfare, minincome, negative tax, minimum wage increases - all these are better than UBI. UBI needs to die as a meme.
> in general it is not the case that prices would rise to consume all citizens' disposable income
I believe that this is the case under UBI. Based just on housing alone! Even minimum wage increases are subverted by price rises. UBI would be costly and have minimal positive impact with the possibility of massive negative impact. It is the worst of all worlds.
People need to understand that there are two UBIs - - Right wing UBI where welfare is liquidated and the proceeds distributed (to the tune of $8k/yr) -> increased income inequality, medieval levels of poverty - Democratic UBI where $24k is given to all and sundry funded by taxes on high income individuals and corporations + printing money -> hyperinflation, economic collapse
Neither of these are futures that we want. Please consider alternatives.
UBI is particularly susceptible because it is a one-time universal increase in income. The increaes is very predictable by landlords and housing sellers.
> If this is the wrong direction, should we make opposite changes - concentrate wealth in fewer hands?
Means-tested welfare, minincome, negative tax, minimum wage increases - all these are better than UBI. UBI needs to die as a meme.
> in general it is not the case that prices would rise to consume all citizens' disposable income
I believe that this is the case under UBI. Based just on housing alone! Even minimum wage increases are subverted by price rises. UBI would be costly and have minimal positive impact with the possibility of massive negative impact. It is the worst of all worlds.
People need to understand that there are two UBIs - - Right wing UBI where welfare is liquidated and the proceeds distributed (to the tune of $8k/yr) -> increased income inequality, medieval levels of poverty - Democratic UBI where $24k is given to all and sundry funded by taxes on high income individuals and corporations + printing money -> hyperinflation, economic collapse
Neither of these are futures that we want. Please consider alternatives.
“Unless there is a mass migration from urban to rural areas” -> I expect this to happen, and it would be great.
I also disagree with your premise, because elasticity of demand for housing isn’t zero, even if you assume zero regional mobility.
I also disagree with your premise, because elasticity of demand for housing isn’t zero, even if you assume zero regional mobility.
> “Unless there is a mass migration from urban to rural areas” -> I expect this to happen, and it would be great.
UBI does open up possibilities for rural communities, but the cultural trend has been the opposite for a long time. I don't see it reversing quickly.
> I also disagree with your premise, because elasticity of demand for housing isn’t zero, even if you assume zero regional mobility.
It isn't zero, but it is very low. Existing house owners fight tooth and nail to prevent higher density zoning. And new construction is slow to respond even to very strong pricing signals.
UBI does open up possibilities for rural communities, but the cultural trend has been the opposite for a long time. I don't see it reversing quickly.
> I also disagree with your premise, because elasticity of demand for housing isn’t zero, even if you assume zero regional mobility.
It isn't zero, but it is very low. Existing house owners fight tooth and nail to prevent higher density zoning. And new construction is slow to respond even to very strong pricing signals.
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> It does not increase the amount of money in circulation.
It does, in the sense that money circulates faster. This is known as the velocity of money, and increasing the velocity of money does cause inflation.
It does, in the sense that money circulates faster. This is known as the velocity of money, and increasing the velocity of money does cause inflation.
Well, it's just taking money out of circulation with taxes and paying it out again. It's not inherently speeding anything up - if anything, slowing it down, since it spends some time in the governments pockets.
There can be a second order effect of having well off people kick out some money to taxes that would be otherwise going to investments. It might cause a temporary inflation bump in consumer prices and a corresponding deflation in investments/assets. But that's a much smaller effect than what the amount of income transfers is. And causing this kind of increase in rate of economic activity is normally not considered negative, indeed politicians normally try to make them happen. And anyway central banks regulate this with monetary policy.
There is no feedback loop of inflation.
There can be a second order effect of having well off people kick out some money to taxes that would be otherwise going to investments. It might cause a temporary inflation bump in consumer prices and a corresponding deflation in investments/assets. But that's a much smaller effect than what the amount of income transfers is. And causing this kind of increase in rate of economic activity is normally not considered negative, indeed politicians normally try to make them happen. And anyway central banks regulate this with monetary policy.
There is no feedback loop of inflation.
> Well, it's just taking money out of circulation with taxes and paying it out again. It's not inherently speeding anything up - if anything, slowing it down, since it spends some time in the governments pockets.
This is completely wrong.
The principle I'm referring to is a standard component of basic macroeconomics and is completely uncontroversial among economists. There's lots of literature about this effect if you'd like to learn more.
This is completely wrong.
The principle I'm referring to is a standard component of basic macroeconomics and is completely uncontroversial among economists. There's lots of literature about this effect if you'd like to learn more.
Are you referring to "velocity of money"? Yes, it's a thing and economists agree it's a thing. But it does not follow that UBI causes runaway inflation - as we covered above. And there is certainly no
consensus among economists about runaway inflation from UBI. (Unless you care to provide references..? I just did a search and came up emty)
Do you think that UBI is qualitatively different from normal tax financed income transfers, from inflation POV, or do you think that just bigger income transfers cause runaway inflation?
Do you think that UBI is qualitatively different from normal tax financed income transfers, from inflation POV, or do you think that just bigger income transfers cause runaway inflation?
I’m a proponent of UBI, so I suspect we’re on the same side of this argument. Still, it seems to me you’re arguing a straw man.
You claimed, “It does not increase the amount of money in circulation”, and that was all chimeracoder was arguing with.
You’re responding as if chimeracoder was arguing increasing the velocity of money will automatically cause runaway price inflation. That’s not what chimeracoder was arguing, though.
As it happens, I think you’re both right, the relevant value for economic activity is the money supply times velocity of money, UBI would likely modestly increase velocity of money but not money supply, the increase in their product would likely cause a modest inflationary shock.
That shock would probably be somewhat offset by dramatic increases in geographic mobility and changes in the distribution and supply of low wage labor for unpleasant jobs.
Sensitivity to housing costs would change in unknown ways, with landlords reaping somewhere between modest and huge windfalls in low housing supply areas, and likely smaller windfalls in areas closer to supply/demand balance, which would tend to make areas with good housing supply more appealing.
You claimed, “It does not increase the amount of money in circulation”, and that was all chimeracoder was arguing with.
You’re responding as if chimeracoder was arguing increasing the velocity of money will automatically cause runaway price inflation. That’s not what chimeracoder was arguing, though.
As it happens, I think you’re both right, the relevant value for economic activity is the money supply times velocity of money, UBI would likely modestly increase velocity of money but not money supply, the increase in their product would likely cause a modest inflationary shock.
That shock would probably be somewhat offset by dramatic increases in geographic mobility and changes in the distribution and supply of low wage labor for unpleasant jobs.
Sensitivity to housing costs would change in unknown ways, with landlords reaping somewhere between modest and huge windfalls in low housing supply areas, and likely smaller windfalls in areas closer to supply/demand balance, which would tend to make areas with good housing supply more appealing.
The inflation impact from UBI should be non existent as the money is taxed from other parts of the economy vs. being created from thin air.
Social Security for example is not a huge driver of US inflation it's simply moving money from pocket A to pocket B.
Social Security for example is not a huge driver of US inflation it's simply moving money from pocket A to pocket B.
> The inflation impact from UBI should be non existent as the money is taxed from other parts of the economy vs. being created from thin air.
Since demand profile and propensity to consume are not consistent across all sectors, transfers of income from one sector to another can reasonably be expected to have effects on general and particular price levels.
Generally, a downward transfer should have some positive first-order effect on inflation. There's good reason to expect this to be modest compared to the size of the transfer so that the recipients have increased buying power just slightly smaller than the pre-transfer prices would suggest.
(OTOH, given the existence of actively managed monetary policy that targets inflation, that first-order effect should itself largely just change the landscape for fiscal policy, translating into less net effect on inflation than without monetary policy and higher interest rates.)
Since demand profile and propensity to consume are not consistent across all sectors, transfers of income from one sector to another can reasonably be expected to have effects on general and particular price levels.
Generally, a downward transfer should have some positive first-order effect on inflation. There's good reason to expect this to be modest compared to the size of the transfer so that the recipients have increased buying power just slightly smaller than the pre-transfer prices would suggest.
(OTOH, given the existence of actively managed monetary policy that targets inflation, that first-order effect should itself largely just change the landscape for fiscal policy, translating into less net effect on inflation than without monetary policy and higher interest rates.)
UBI does not necessarily increase the total income of the lowest quarter of the economy. What programs are removed, how much more or less they work, etc are all somewhat open questions.
Depending on implementation universal healthcare might lower the US governments spending on Healthcare. In that context UBI is about implementation not necessarily total wealth transfer. Presumably eliminating subsidized housing for example would result in more efficient resource allocation.
If UBI is set at X, then a social security payment larger than X becomes suspect etc.
Depending on implementation universal healthcare might lower the US governments spending on Healthcare. In that context UBI is about implementation not necessarily total wealth transfer. Presumably eliminating subsidized housing for example would result in more efficient resource allocation.
If UBI is set at X, then a social security payment larger than X becomes suspect etc.
I think this conflates monetary inflation with cost inflation. A universal one time increase in income will likely be absorbed by an increase in the cost of housing unless there is a mass migration from urban to rural areas.
UBI is not a universal increase in income.
Moving money from group A to group B means group A has less money. So housing prices might shift with some price decreases largely offsetting price increases in other areas.
Inflation is a different effect where there is a net price increase.
Moving money from group A to group B means group A has less money. So housing prices might shift with some price decreases largely offsetting price increases in other areas.
Inflation is a different effect where there is a net price increase.
Thinking not having money is the issue of Kenya is belatedly false. Corruption, wars, extorsions, won’t be solve by more “free” money.
I think this article misrepresents "skeptics". "Disincentive to work" is really only one reason to be skeptical, and I'd argue not a good one. I'm more concerned about potential unintended consequences that wouldn't manifest in small scale studies such as this one. For example, suppose UBI leads to inflation after 5 years but only once it is truly national-scale. Small-scale studies may not even look at this metric, or be able find correlation if they did. By the time it was apparent, choice would be to roll it back and cause social upheaval, or continue inflation, both of which could hurt the people UBI is designed to help most.
Obviously I don't have any data to know if UBI leads to inflation or not, but that's sort of the point. Ideally we'd have data on this and other effects beyond just "does it help individuals?", but those effects may be difficult to test.
Obviously I don't have any data to know if UBI leads to inflation or not, but that's sort of the point. Ideally we'd have data on this and other effects beyond just "does it help individuals?", but those effects may be difficult to test.
But your objection would apply to all economic policies. Why is this any different?
Well, I do tend to hold that objection for lots of economic policies ;) Governments can be really bad at foreseeing things like this and slow at changing direction once they are detected. Obviously one can take that too far and do _nothing_ out of fear of unintended consequences. But to the degree we can think through those potential outcomes and devise ways to test for them, we should.
>But to the degree we can think through those potential outcomes and devise ways to test for them, we should.
What are some of those ways to test it that you suggest? This study isn't focused on your particular concern of inflation.
What are some of those ways to test it that you suggest? This study isn't focused on your particular concern of inflation.
Right, it'd be really hard in this case. Only being armchair-level interested in UBI I'd have to be content hoping that real economists and UBI researchers would come up with ways to test or at least address the risk. Maybe there are ways to do computer models around that, or ways to structure a roll-out so that it is very clearly a "trial" until various macro impacts can be measured. Another way to test, at least in the US and similarly organized governments, is to rely on states to implement. 50 different parallel experiments measuring UBI vs no-UBI impact. The trick would be to measure fairly and transparently, and react without political spin and bias, which I don't really see happening soon.
My other motivation for posting is hoping that reporters and other HN readers would see there is skepticism besides just "it'd make people lazy".
My other motivation for posting is hoping that reporters and other HN readers would see there is skepticism besides just "it'd make people lazy".
One thing that I am surprised that nobody talks about, when discussing UBI is the fact that the USA already has UBI for a largish segment of the population.
The US UBI program is called social security. It is just a check that is given to old people with which they can use for whatever they want.
Why can't we study what this group of people does with their money?
The US UBI program is called social security. It is just a check that is given to old people with which they can use for whatever they want.
Why can't we study what this group of people does with their money?
Having free money after a lifetime of working that you feel you contributed to seems different from having it available before you've worked before.
The problem with UBI is not the idea itself. It's the unintended consequences and edge cases.
For example, it might be that UBI causes people to work MORE and die sooner at riskier jobs (like working oil fields). What is the net effect of that?
Also, what if it doesn't do much more than inflate prices to the point that people still have to work just as much? Could it just reset the sort of "zero point" higher?
What if people have an in-built need to work to have value in life? Would paying them not to work cause their life to lose its value and increase suicides or other negative behavior?
Also, will people start having more kids to somehow get more UBI benefits?
Large system changes mean serious consequences that go beyond the obvious. Anyone who has ever worked on a large software system surely have experienced this.
I don't expect failure, but I do expect some seriously weird and unintended outcomes that are non-obvious.
For example, it might be that UBI causes people to work MORE and die sooner at riskier jobs (like working oil fields). What is the net effect of that?
Also, what if it doesn't do much more than inflate prices to the point that people still have to work just as much? Could it just reset the sort of "zero point" higher?
What if people have an in-built need to work to have value in life? Would paying them not to work cause their life to lose its value and increase suicides or other negative behavior?
Also, will people start having more kids to somehow get more UBI benefits?
Large system changes mean serious consequences that go beyond the obvious. Anyone who has ever worked on a large software system surely have experienced this.
I don't expect failure, but I do expect some seriously weird and unintended outcomes that are non-obvious.
This is a great study and I hope it nets some value. UBI has already been tested in Canada and other areas of the world where it was abandoned.
The outcome, I would guess, is very circumstantial. Perhaps in Kenya, where there is lack of infrastructure and high corruption, giving people money will result in greater improved quality of life over providing subsidized services.
In Canada, I would argue that subsidized services (free healthcare, education, maternity leave, etc.) are more important as they guarantee that a person cannot possibility fall into the debt trap. Perhaps the ideal is something in between: cash (UBI) and services.
The outcome, I would guess, is very circumstantial. Perhaps in Kenya, where there is lack of infrastructure and high corruption, giving people money will result in greater improved quality of life over providing subsidized services.
In Canada, I would argue that subsidized services (free healthcare, education, maternity leave, etc.) are more important as they guarantee that a person cannot possibility fall into the debt trap. Perhaps the ideal is something in between: cash (UBI) and services.
I wonder what size a community needs to be for UBI to function in a self-sustaining way. I'd like to see some game theoretical research into it too if anyone has pointers?
That's a good question. By the same token: is there a maximum community size that can support UBI?
Quite possibly, things like distance and number of participants would most likely change the dynamics.
That's why I was wondering about the game theory part, so it could perhaps be modelled and tested in software. Running large scale UBI experiments is pretty slow and expensive, so tuning the parameters in the real world to make it work is going to take a very long time and cost a lot of money.
That's why I was wondering about the game theory part, so it could perhaps be modelled and tested in software. Running large scale UBI experiments is pretty slow and expensive, so tuning the parameters in the real world to make it work is going to take a very long time and cost a lot of money.
How exactly do you plan on modeling how people are going to behave after receiving the aid? That's what these real-life experiments are trying to do in order to inform their models.
It's not like economists don't know how to build models...
It's not like economists don't know how to build models...
I don't know what I would model or how - that's why I was asking for pointers :)
And I in addition to economists, I would be interested in seeing contributions from physicists, computer scientists and machine learning researchers. This paper was super interesting - https://arxiv.org/abs/1706.03058, as was this - https://arxiv.org/abs/1803.06376
But would like to see UBI specific papers.
And I in addition to economists, I would be interested in seeing contributions from physicists, computer scientists and machine learning researchers. This paper was super interesting - https://arxiv.org/abs/1706.03058, as was this - https://arxiv.org/abs/1803.06376
But would like to see UBI specific papers.
When studying UBI isn't it hard to control for the fact that only a small group is receiving funds, rather than every unemployed/underemployed person in the country (which would be the case if UBI became federal legislation)? As jobs are automated, we will need to do something...
I think the answer is yes. Also, if everyone just gets $X, will prices also rise by some Y close to X as people will feel less attachment to this $X as it was free? I've yet to see a truly thoughtful model of what all will happen. For example, UBI is said to replace all the bureaucracy of today's welfare programs. That is a lot of people that will lose their jobs, including the cycle of the people who used to supply goods and services to those people. Some of those companies will close and layoff more people, etc., etc. It doesn't go infinite but it definitely cascades. We can see proof of this in old steel towns or some place like Detroit. As good jobs dry up, it starts an economic slide.
To me it seems like the only way to make a true study is to do it on a self-sustaining population, in other words very little to no outside money. The cost saving by the community should fund the income rather than the general population funding a tiny population. That will always work.
It is generally agreed (and obvious) that a universal income is beneficial the crux remains though how we pay for it.
It is generally agreed (and obvious) that a universal income is beneficial the crux remains though how we pay for it.
Title should include the word "will" as it is just getting under way. No conclusion yet.
OK, we've added a “will”!
Or 'should' :-)
it's grammatically correct, albeit misleading
I didn't have an issue w/ the grammar, but the misleading description. :) It's a significant difference between a study starting and having a conclusion (or even partial data). In my mind, it's the difference between clickbait and non-clickbait headline, even though the article is very interesting.
This is at the University PR section of http://phdcomics.com/comics/archive.php?comicid=1174
This is at the University PR section of http://phdcomics.com/comics/archive.php?comicid=1174
misleading as in people think that the study starts when the trail ends, when in practice the study starts when the trail starts (because people aren't aware of this)
I would much rather we have a jobs program.
Anyone who needs work can get it at $15 per hour and up, depending on what the job is.
There is a whole lot we need doing. If we do that, we are worth more, and we get something meaningful in return for a direct economic stimulus.
Our infrastructure needs refurbished. Our homeland needs a cleanup, and could really benefit from some care and feeding. Our parks can be improved, making them attractive in the same way we did before.
I don't feel UBI makes sense. It's just a payoff, and it's real value will be diluted. Too easy to just adjust it up or down to throttle work needs, buying power.
Anyone who needs work can get it at $15 per hour and up, depending on what the job is.
There is a whole lot we need doing. If we do that, we are worth more, and we get something meaningful in return for a direct economic stimulus.
Our infrastructure needs refurbished. Our homeland needs a cleanup, and could really benefit from some care and feeding. Our parks can be improved, making them attractive in the same way we did before.
I don't feel UBI makes sense. It's just a payoff, and it's real value will be diluted. Too easy to just adjust it up or down to throttle work needs, buying power.
In some countries, rising automation means there are no jobs to be had, or that skilled persons fall down the ladder until they're working unskilled jobs. We pretend its 98% employment, but folks with degrees are working food service.
A 'jobs program' in this environment is doing no good. There are already 30M people in service jobs (The lowest paid), and they're being automated away right now. We can't retrain them all to be engineers; we don't even need 30M more engineers. What are we to do? The solution won't be 'do what we did before' because, we've never been in this situation before.
Oh, wait, in England they were in this situation when weavers were replaced by textile mills. Their solution: let the weavers starve and die. Maybe not the answer we want today.
A 'jobs program' in this environment is doing no good. There are already 30M people in service jobs (The lowest paid), and they're being automated away right now. We can't retrain them all to be engineers; we don't even need 30M more engineers. What are we to do? The solution won't be 'do what we did before' because, we've never been in this situation before.
Oh, wait, in England they were in this situation when weavers were replaced by textile mills. Their solution: let the weavers starve and die. Maybe not the answer we want today.
"In some countries, rising automation means there are no jobs to be had"
Source on this claim? Interested in the topic and would like to read more.
Source on this claim? Interested in the topic and would like to read more.
In the US, automation is growing explosively. When factories 'come back to the USA' from India or China or wherever, its not because they're paying enough to attract Americans; its because they automated and don't need (hardly) anybody.
Further, bank teller and fast-food worker are the next to be automated away. Its happening everywhere, with touch-panel counter service.
Further, bank teller and fast-food worker are the next to be automated away. Its happening everywhere, with touch-panel counter service.
I caution that either conclusion would be unjustified because this is not a UBI experiment, this is a charity and aid distribution experiment. The question at hand here isn't "is UBI a wonderful thing" but rather "how do UBI-like distribution methods compare to others?" If you want proof consider that Tavneet Suri's isn't a UBI economist focusing on western countries, "her expertise is as a development economist, specialized in Sub-Saharan Africa" [1]
I object to labeling this as a UBI experiment. "Universal Basic Income" is used to describe various proposals to address inequality and unemployment in developed countries where economic gains and jobs are being automated away from the masses of low-skilled workers and up to the elite of high-skilled workers. This is far from the sub-Saharan African context where the economy is still developing and leaders are mulling how best to sustainably extract countries from extreme poverty.
[1] http://mitsloan.mit.edu/faculty-and-research/faculty-directo...