[admin_account]

What is the point of UBI studies this small? Giving a few hundred people extra money each month will improve the well being, no question about it.

The issues with UBI only arise when it's done at scale. For example let's say you give every US citizen over 18 a monthly UBI check for $1000. What's stopping prices from rising accordingly? How will the ~$3T yearly UBI bill be paid for?

The question of how is this paid for is my biggest issue with UBI. If someone can give a reasonable answer that doesn't require national price fixing, taxing tech companies on their data, or some version of reshuffling the current budget around, I'll happily change my mind. Until then, for me, UBI is nothing more than an economists wet dream.

[skybrian]

Sometimes there has been skepticism about giving people cash as a form of charity because they're worried that the money won't be well spent. (They'll spend it on drugs or alcohol or whatever.) More evidence to settle that question is useful.

If we've moved beyond that to worrying about what happens at scale, that's progress.

[dahfizz]

Studies like this do not settle that issue for me.

This study is based solely on what the participants claim they spend money on. It's a core principle of the study that the money is "no strings attached". That makes it useless as an actual study, IMO.

Without a more comprehensive study of the budgets of people before and after, the idea that the money won't be spent well is a fair argument.

[nbadg]

All money is fungible. That's the point of UBI: let individuals decide for themselves what the best use of it is, instead of having the state decide for them.

Different people have different wants and needs. Would you consider toys for children "spent well"? What about a netflix subscription? What if that netflix subscription gives the kids something to do while Mom goes to school? What about a babysitter, so parents can go out and feel human for once? What about a framed picture of a relative that just passed away?

Improving financial literacy is a vital and often under-discussed component of successful UBI programs. I think it's crucially important we make programs explaining banking, savings, etc available (and maybe even required!) as part of UBI programs. These are absolutely necessary to give people the financial fundamentals they need to survive in a world that doesn't care enough about them to teach it effectively, if at all, in public schools.

But if you're insisting on evaluating the success of UBI experiments based on what the recipients spend money on, instead of how it affects their quality of life and/or their financial trajectory... then you're completely missing the point of UBI.

[jonfw]

> Different people have different wants and needs. Would you consider toys for children "spent well"? What about a netflix subscription? What if that netflix subscription gives the kids something to do while Mom goes to school? What about a babysitter, so parents can go out and feel human for once? What about a framed picture of a relative that just passed away

All of those are good examples of money well spent, or at least fairly well spent.

Bad examples would be things like drugs, alcohol, prostitutes, gambling, car/truck modifications, dirt bikes, ATVs, pornography, guns, etc.

That's what people are concerned about, not photographs of your dead grandma.

[milesvp]

Well actually...

guns tend to have an amazing return on investment. Every time a gun law passes, my buddy's gun collection goes up in value.

But to be more serious. I hadn't really thought about it before, but the majority things in your list, while often considered trashy in american culture, all tend to have the potential to have big negative externalities. This could end up being a real problem for things like UBI. As an economist, I have some pretty severe reservations about UBI mostly at a meta level regarding unavoidable inflationary pressures that may all but negate the value of an UBI. But it could end up being even worse than I imagine if an UBI ends up flooding neighborhoods with an excess of high negative externality goods and services.

Still, I've heard good things about the effects of direct cash transfers in very poor regions. They seem to be no more destructive than, say, giving cattle, while having lower overhead so more of the wealth is transferred. I understand much of the money ends up going towards things that more money conscious people might considered wasteful, but many indicators suggest there's still a general life improvement for those who receive the cash, even if the effects may be short lived. So I'm a little open minded about the concept in general.

[jmelloy]

How many dirt bikes do you think someone is buying? Is your concern that after being on UBI for a year someone will have 12 dirt bikes and a starving child?

If 99 people don’t buy drugs, and 1 person does, is the system a failure?

[jonfw]

I'm just giving legitimate examples of wasteful things that people spend money on, because the person I was responding to seemed to have trouble coming up with good ones.

Just like the examples you're giving me- 12 dirt bikes? That's obviously a ridiculous proposition. So is only 1 out of 99 using that money to buy drugs- a much larger percentage of our population than that partakes. Using stupid examples like that doesn't persuade anybody that Americans are mostly financially responsible.

[indrax]

I'm trying to find the pattern in your bad examples. It's not morality, they're all luxuries? Would a gaming computer be bad?

UBI should incentivise other income and would still be available even to the wealthy. Some of the extra will go to industriousness, some will go to frivolousness, but would we expect anything different from general economic prosperity? I guess we need to find a control group that gets more money on their own?

[dahfizz]

"Prostitution: a luxury you can now afford!"

You have to understand that you need to sell UBI to America. It will never be implemented unless you can convince the tax paying populous that it will be "good", for some definition of "good". With taglines like that, you are making ubi less and less desirable for most people.

[jjeaff]

Many if those things have negative externalities. More guns, more violence. More prostitution, more human trafficking and other abuse (same for pornography). more illicit drugs, more trips to the emergency room and more deaths, etc.

[tekno45]

But we're seeing their quality of life improve.

You don't see what they spent it on, but they have found a way to spend these funds to improve their situation.

[dahfizz]

That wasn't the question. GP points out that that is completely obvious. Nobody would doubt that free money would make you happy without considering the economic issues of scaling the program.

The issue is "are the recipients spending the money well"? Are they saving, and using the money to advance themselves, and budgeting? Or is it all going to "waste" and doing nothing productive?

[danans]

> The issue is "are the recipients spending the money well"? Are they saving, and using the money to advance themselves, and budgeting? Or is it all going to "waste" and doing nothing productive?

Even just spending it on better food, better clothes, or going to the movies is spending it well. It's UBI, intended to be used as a tool to put a floor on standard of living, not a scholarship or a 401k match.

[toomuchtodo]

Why would you target productivity over quality of life? We're already more productive than at any point in human history. The productivity is why we can optimize for quality of life, not a justification for attempting to squeeze even more productivity out of citizens.

[dahfizz]

Sorry if I was unclear, I meant is the money being used productively (paying off debts, investing, buying products in bulk, etc).

> Why would you target productivity over quality of life?

I'm not sure that I do that, but the general public absolutely will. The taxpaying public will absolutely not tolerate a UBI that just funnels money into drug cartels, etc. You need to show that the UBI is useful or helpful somehow, not just that it makes people happy.

[tekno45]

Isn't the point actually to see if people's lives improve?

If i get 2k a month and spend it on drugs, you don't see quality of life improve.

It is being spent well because they are keeping a roof over their heads and themselves fed and not worrying about where thhe next meal comes from.

[benchtobedside]

Actually a portion of spending by participants in this study is tracked via pre-paid debit cards.

To quote from the article: "Data show that since the pandemic started, food spending by SEED recipients increased nearly 25% over the monthly average. In March, it accounted for 46.5% of spending the researchers were able to track using prepaid debit cards"

[ericmcer]

Its more about whether UBI leads to productivity or not. If someone is going to drink 6 beers and do lines of coke all day, but they create goods and services, they are more useful than someone who is drug/alcohol free who watches Netflix all day.

My fear is that true UBI will create a giant section of the population whose sole purpose is to consume food/water/utilities and create meaningless art, music, babies, etc. which raises questions about what our purpose in the universe is.

[pseudalopex]

"I must study politics and war that my sons may have liberty to study mathematics and philosophy. My sons ought to study mathematics and philosophy, geography, natural history, naval architecture, navigation, commerce, and agriculture, in order to give their children a right to study painting, poetry, music, architecture, statuary, tapestry, and porcelain."

[wahern]

> My fear is that true UBI will create a giant section of the population whose sole purpose is to consume food/water/utilities and create meaningless art, music, babies, etc. which raises questions about what our purpose in the universe is.

What they consume is culture, culture has a price tag, and the most sought-after culture is the most expensive.[1]

I'm sure UBI will change marginal spending behaviors. The question is by how much. I doubt it would change spending habits so much that civilization collapses, but even if it would some evidence of that effect would be captured by studies attempting to capture more boring marginal effects.

[1] Including the culture of non-consumerism, which uncoincidentally is conspicuously favored by the elite and wealthy.

[scarmig]

> What's stopping prices from rising accordingly?

Prices for different basic necessities will rise, but not enough to counteract the value of the UBI itself. The exact amount depends on the particular price elasticities of the good in question. Everyday food is likely to be relatively minimally impacted, while low-income housing would be much moreso. In broad strokes, you'd see prices rise (to different extents) on goods low-income people disproportionately purchase, but not enough to consume the majority of the UBI grant. This isn't a particularly difficult thing to predict.

> How will the ~$3T yearly UBI bill be paid for?

This is the much more significant issue. I'm not sure why you discount shuffling the current budget around: because of e.g. Social Security, you already have a funding stream for most seniors' UBI. Beyond that, you'd need an broad array of steep taxes (compared to today) to pay for it. 24% of current US GDP goes toward taxation. Bump it by ~15% which brings us to the level of hellholes like Germany, Belgium, and Denmark and you get >2 trillion dollars.

The exact basket of taxes used matters, but would undoubtedly be the result of a complicated political negotiation. It's fair to reserve judgment until you get the actual set of revenue streams, but obviously whatever I tell you here is meaningless until you get to the sausage making of real-life federal legislation.

[jjeaff]

Except social security is already not solvent and will require additional money / taxes to prop it up. So I don't think we can just meet that out.

[gatvol]

Poverty costs the state as truckload, the cheapest way to solve poverty is by simply giving poor people money, other interventions have been proven to be ineffectual.

[NovemberWhiskey]

The total, broadly construed cost of every US anti-poverty program is less than one-third of the $3tn mentioned above. You only even get that if you include Medicaid.

[kaibee]

No, you misunderstand. That's how much we're spending to decrease worst symptoms of poverty to a manageable level. The actual opportunity cost, in terms of wasted human potential is far greater, unless you believe that current US anti-poverty programs are doing a great job.

(Also the ways its done now has its own share of terrible value destroying externalities, ie: the welfare cliff)

[lotsofpulp]

Evidently that is insufficient. Also, more important than just poverty is insecurity. Not being secure in one’s ability to provide for themselves and their family, for example because of volatility in employment markets, causes all sorts of side effects.

I have quite a few acquaintances who simply didn’t get into relationships or have children because they are not sure of their ability to provide the minimum level of care they think they should.

[IanCal]

But the figure is, frankly, a silly one. That would be the cost assuming no income tax changes at all. You can shift the tax thresholds and rates to make it a net 0 change for everyone earning over some figure.

[NovemberWhiskey]

I see that as the basic problem in this discussion.

Proponents of UBI say "everyone will receive $X per month". When people ask "how will this be paid for?", the answer is always "changes to tax schedules, savings on social programs", but this tells us nothing without details.

[fny]

You should read into Modern Monetary Theory. The government can print the money by issuing treasuries: there's no need for the money to come from anywhere. Social security can easily be paid for. Interest on debt is never a problem.

The base argument is that any government that issues its own currency can never default, so it can incur large deficit spending that creates a surplus in the private economy.

The difficulty is whether that surplus is put to produce growth which would offset the inflation that conjuring money creates. If everyone sits at home doing nothing, you bet inflation will happen. If it's used as a cushion, perhaps not.

[grandmczeb]

It’s important to note “Modern Monetary Theory” (aka MMT) is almost unanimously rejected by mainstream academics[1]. Its largest proponents are political leaders rather than economists.

[1] http://www.igmchicago.org/surveys/modern-monetary-theory/

[jpxw]

MMT is an absolute joke, I’m glad at least someone has called it out here.

[fny]

It's also important to note that main stream academics all thought the stimulus during the financial crisis would be inflationary, and they were wrong. Now, I'm not advocating for the government to print money galore since more dollars chasing fewer resources means inflation, but I think there's a decent case to be made that the current debt level is sustainable if we can gain efficiency to match the rate of currency growth.

Also, I should add--I do not think UBI is a wise path.

[bhupy]

Question: why not abolish all taxes, then? If we can just MMT the current Federal budget, why should anyone pay taxes?

[rapind]

You can implement a progressive tax using UBI and a flat tax instead and thus get rid of all the loopholes and tax screwery. IMO this is what all countries should do. Corruption loves complexity.

[hpkuarg]

I dream of the day that a land value tax, and only a land value tax, covers all government services. In fact, one could argue that the size of government that a land value tax supports is the maximum size.

[bhupy]

All excellent ideas. Unfortunately I think a Federal LVT would require a Constitutional amendment, but nothing stopping us from doing this at the State level.

[fny]

An MMT theorist would argue that taxation is used to withdraw money from circulation and redistribute income. They advocate for using fiscal policy to drive monetary policy.

I just want to state for clarity's sake that I don't espouse the policies of MMT theorists. It's just a framework that appears to have some analytical merit. For example, despite the roaring deficits, why has demand for treasuries not decreased? Why did QE and high government spending not cause inflation? Why do surpluses tend to trigger recessions?

[imtringued]

The reason why we don't see consumer price inflation is that most central bank policies do not actually involve consumer goods. Stocks, education and housing are inflating according to conventional economics. If you were to fund a UBI by printing money then the printed money would be spent on consumer goods and you would see consumer inflation.

[throwsoundpop]

> If everyone sits at home doing nothing, you bet inflation will happen

Why would people sitting at home doing nothing be detrimental to growth? Growth doesn't necessarily require masses of people to do more work; it can be achieved through productivity gains, e.g. improvements in tooling, and research + development.

[ralusek]

That would involve them not sitting at home doing nothing...

[komali2]

The inflation question is the most common

> https://medium.com/basic-income/wouldnt-unconditional-basic-...

> basic income is not the idea of printing $3 trillion new dollars every year and dropping it on everyone from helicopters.

> The money for a basic income guarantee would be already existing money circulated through the economic system. It would not be new money, just money shifted from one location to another. This means that the value of each dollar has not changed. The dollar itself has only changed hands.

> Rising rent is a particularly worrisome fear for many when first introduced to the idea of basic income. However, two very important things in particular need to be understood when it comes to housing.

> There are five times more vacant homes than homeless people in the United States today. This represents a large unused supply that need only be made available. The reason many people are not living in these homes is because they were at one time but couldn’t afford to keep them. Basic income rectifies this and puts people back in homes.

> Technology represents a major factor in future housing prices, especially a future where everyone has a basic income. Everyone will receive a monthly check to afford rent, and will want to spend as little of it as possible on rent. Meanwhile, owners will want to compete for this money with other owners.

[labcomputer]

> There are five times more vacant homes than homeless people in the United States today.

This sort of disingenuous statistic makes it very difficult to take the rest seriously. Just like there is frictional and non-frictional unemployment, there is frictional and non-frictional home vacancy.

Suppose I sell my house and move out the week before the buyer moves in. The house is vacant, right? But it is not vacant in a way that is useful for housing the unhoused. The house will be occupied again in a week, and an it needs to be cleaned before the new owners take possession.

The same thing happens for apartments: Old tenant moves out, landlord cleans up the place and puts it back on the market. It's technically vacant for a period of time while the apartment is cleaned and repaired, but (again) not in a way that is useful for providing shelter to people who are without homes.

> This represents a large unused supply that need only be made available.

This "frictional" vacancy actually makes up the vast majority of vacant homes. It can't be usefully repurposed as a permanent or semi-permanent place for people to live. The other problem is that the geographic distribution of "actually-vacant" homes may not match the geographic distribution of people who need homes, and asking people to move is a live wire in an discussion about homelessness.

Circling back to the broader point about inflation: You haven't addressed it in any credible way. In particular, even if it were true that there is a vast, untapped supply of housing, I see no reason that landlords won't increase rent by approximately the monthly amount of UBI. After all, they're happy with whatever the real vacancy rate is today, and everyone would have the means to pay an additional $UBI_MONTHLY per month.

Why would landlords suddenly change their tune and leave money on the table?

[bhupy]

> What's stopping prices from rising accordingly?

Short answer: supply & demand

Long answer: if the supply of a thing isn't constrained (either naturally or artificially), then prices will rise in the near term, but will settle back down in the long term as production catches up with demand. This is why giving poor people food stamps (which is just food money) doesn't necessarily increase the price of food.

This mostly only breaks down in housing, for which there is a true supply scarcity — but even that ceases to be true in a regime with proper zoning reform. Even in regions without zoning reform, you now have people that have cash to move to cheaper neighborhoods — or even cities.

> How will the ~$3T yearly UBI bill be paid for?

Either progressive taxation, a VAT, or some combination thereof. I can try and give you a theoretical tax breakdown using real numbers.

In 2018, the household income quintiles were as follows[1]:

Lowest quintile mean: $13,775

Second quintile mean: $37,923

Third quintile mean: $63,572

Fourth quintile mean: $101,570

Highest quintile mean: $233,895

There were about 159M employed persons in the US in the most recent high[2], about 50% of the US population. We want our UBI to cover everybody.

To make this simple, because quintiles comprise an equally populated group of people, let's imagine that instead of there being ~32M people per quintile, that our nation has 10 people, where 5 people don't work, and each of the remaining 5 falls into one of the quintiles.

If we wanted to define a UBI of $18,000 per person, we need to somehow come up with $18,000 * 10 == $180,000 to distribute to everyone equally.

If we fund this progressively, each individual would have to pay:

Unemployed #1: 0

Unemployed #2: 0

Unemployed #3: 0

Unemployed #4: 0

Unemployed #5: 0

Lowest: $8,000

Second: $12,000

Third: $18,000

Fourth: $33,000

Highest: $103,000

Total revenue: $180,000

Then consider that everyone here is receiving back 18,000 under the UBI. The highest quintile earner’s net take-home is, thus 233,895-103,000+18,000 == $148,895, which effectively renders their net tax rate approx 36%. If you run this breakdown across all quintiles:

Unemployed #1-5: $0 - $0 + 18,000 == $18,000

Lowest: $13,775 - $8,000 + $18,000 == $23,775 (effective tax -73%)

Second: $37,923 - $12,000 + $18,000 == $43,923 (effective tax -16%)

Third: $63,572 - $18,000 + $18,000 == $63,572 (effective tax 0%)

Fourth: $101,570 - $33,000 + $18,000 == $86,570 (effective tax 15%)

Highest: $233,895 - $103,000 + $18,000 == $148,895 (effective tax 36%)

You'll notice that the top 2 pay a tax rate that’s comparable to today’s. We wouldn't necessarily need to increase everyone's taxes by the above amount, because there's some wiggle room in the Federal budget. Examples, we can probably eliminate Social Security (which would just be replaced by the UBI), Medicare (which is an in-kind donation that the UBI can be used to pay for), Medicaid (ditto), EITC/CTC (basically already a BI), and food stamps (ditto).

Also notice that because the lowest quintile still ends up with more than the unemployed person after their taxes, there isn’t a disincentive to work.

We can play with different levels of progressivity and generosity, but the idea is the same. We can scale up from single-person quintiles to million-person quintiles, but the percentages don't change.

[1] https://www.taxpolicycenter.org/statistics/household-income-...

[2] https://tradingeconomics.com/united-states/employed-persons

[elindbe2]

I don't think it's reasonable to think that UBI could replace SS and Medicare, elderly people aren't going to give up those benefits for a significantly smaller lump sum. The average SS payment is already greater than $18k per year, not even including the value of Medicare. At best, you might make people who collect SS and Medicare ineligible for UBI, though that would no longer make it universal and the elderly might also vote en masse to collect both.

The argument is similar for other forms of welfare. A single mom getting housing benefits plus food stamps plus Medicaid isn't likely to trade her much higher value benefits for a smaller lump sum. At best you might give her the choice between the two.

Ultimately, most of the expense you are proposing would have to come from new taxes that are in addition to the current Federal budget.

[bhupy]

> I don't think it's reasonable to think that UBI could replace SS and Medicare, elderly people aren't going to give up those benefits for a significantly smaller lump sum.

My point is that you can compute the per capita benefit for each, and include that in the basic income. In FY2019, Medicare cost the Federal government $645 billion. In 2018, there were 59,869,402 Medicare enrollees, which works out to about $11,000 per year per person. Medicare is, therefore, an in-kind donation of $11,000 per year. You can either give people this money directly, or you can just deduct $11,000 from the yearly UBI and have it pay out $7,000 per year instead.

While the elderly do indeed really like Social Security, it would probably be better for everybody for the elderly to accept less welfare so that everyone else can also receive some of the basic income. Households above the age of 55 hold 75% of American wealth, in part because most old people are rich: they've saved up money over their entire working lifetime. While there are senior citizens that are poor, the UBI would in theory be more than enough to meet their needs.

[nightski]

One huge problem with your reasoning is that the Medicare costs are equally distributed. As we know, that is very far from the case and your solution of equal cash payments will absolutely not work. That's the entire point of insurance in the first place.

[bhupy]

Medicare is like any other insurance company — there are monthly premiums into an insurance pool. I work in insurance, and I can tell you right now that your Oscar Healths, Aetnas, and United Healthcares all represent the monthly cost to administer some insurance for some pool by that monthly premium. That's THE WHOLE POINT of insurance, that everyone pays the same and the output is unevenly distributed. It's shared actuarial risk.

Medicare likewise operates the same way, except it's government-run and non-profit. The government could, in theory, run the exact same insurance service, and collect monthly premiums to pay for it. The UBI could include in it the amount necessary to afford the Medicare monthly premium for everybody.

[elindbe2]

I'm not quite following you, you still seem to be suggesting that they go from ~$18k avg. SS payment + $11k avg. Medicare payment = ~$29k to an $18k per year payment, a loss of $11k per year on average. Am I missing something? What about people who are entirely dependent on SS+Medicare for their meagre retirement?

As you have noticed in your example, most of that money gets eaten up by healthcare costs leaving very little on which to live ($7k), so essentially are you suggesting that most people should no longer retire?

[bhupy]

I closed out the above math with the following: "We can play with different levels of progressivity and generosity, but the idea is the same."

You seem to be making the argument that $18,000 is not enough, and that we actually need a UBI of $29,000, or in our fictional US-demographics-proportionally-scaled-down-to-10 person nation, $290,000 total.

Okay sure, it would involve higher taxes for sure, but here's what that might look like:

Unemployed #1-5: 0

Lowest: $10,000

Second: $27,000

Third: $37,000

Fourth: $44,000

Highest: $172,000

Total revenue: $290,000

Unemployed #1-5: $0 - $0 + 29,000 == $29,000

Lowest: $13,775 - $10,000 + $29,000 == $32,775 (effective tax -137%)

Second: $37,923 - $27,000 + $29,000 == $39,923 (effective tax -5%)

Third: $63,572 - $37,000 + $29,000 == $50,572 (effective tax 12.5%)

Fourth: $101,570 - $44,000 + $29,000 == $86,570 (effective tax 15%)

Highest: $233,895 - $172,000 + $29,000 == $90,895 (effective tax 61%)

Now, a top marginal tax rate of 61% is the kind that you see in Sweden, Finland, Japan, Quebec Canada, or Denmark. But on the other hand, keep in mind that under these conditions, you are now able to completely swap out many of the Federal government's existing programs, per your constraint. Also keep in mind that I've completely ignored the payroll tax, which brings in 35% of the Federal government's revenue.

The fundamental point is that you can play with different levels of progressivity and generosity and be able to fund a UBI at varying levels. It's very similar to how we go about funding universal welfare states in general, where the government directly provides goods & services that need to be paid for by taxation anyway.

[NovemberWhiskey]

>Now, a top marginal tax rate of 61% is the kind that you see in Sweden, Finland, Japan, Quebec Canada, or Denmark.

You are not describing a marginal tax rate though. You're describing an effective tax rate, as you acknowledge immediately above.

In Japan, the top marginal rate of income tax is about 55% on taxable income over ¥40M (say $370K). Let's see how the marginal tax rate between the fourth and fifth quartiles in your example compares with that, and also look at Japan's effective tax rate around the same income levels as your highest quintile.

Your fourth quintile household takes home $86,570 on an income of $101,570. With an incremental income of $132,415 above that, your highest quintile household takes home only $4,325 more. The marginal rate of taxation is therefore 96.7%

Someone with an salary of $250K in Japan (call it ¥27.2M) gets a standard earned income deduction of ¥2.2M plus a personal exemption of about ¥400K. The taxable income is about ¥24.6M.

National income tax will be about ¥7M. Local income tax will be about ¥2.5M. Take-home pay will be about ¥17.7M and the effective tax rate approximately 35%.

[elindbe2]

Forgive me, I'm still not understanding. Increasing my income from $101k to $233k would net me $4k after taxes? Isn't that a marginal tax rate of 97%? I have to imagine there would be some kind of economic fallout from that. It would likely cause huge declines in government revenue as people try and hide as much income as possible or high earners move overseas.

[as300]

> > What's stopping prices from rising accordingly?

> Short answer: supply & demand

This seems to run counter to the idea of inflation. Could we not apply your same argument to all goods and services? And if so why have prices consistently risen for all of human history?

I think the real answer is that NOTHING will stop prices from rising accordingly - however the purchasing-power of the average person will still increase due to in-elasticity of demand for the basic goods and services with respect to income. For example, the average American who gets $1200/mo for free would not think to spend that entire $1200 on milk, rice, vegetables and other necessities for his or her family. They would likely save some of it, and maybe spend it on luxury items or use it to help pay for a new car, new watch, etc. This means that to the bottom 50% who is struggling the cost of the necessities of life don't rise by $1200 - they maybe rise by $600 or even $800 - so its a difference of $400 of purchasing-power per-month for those people. And $400/month is actually a huge deal for people in that income group. Also, this doesn't even account for the increased wages resulting from increased consumer-spending.

I realize this logic is add-hoc so someone please tell me if/where I am wrong.

[bhupy]

> Could we not apply your same argument to all goods and services? And if so why have prices consistently risen for all of human history?

Um, yes? But for most goods and services, prices have decreased relative to inflation. The only exceptions to this are housing, college education, and healthcare — but those are policy problems. The price of most goods and services have not only decreased relative to inflation, they have also increased in quality.

White bread, cost per pound (inflation adjusted)[1]:

1977: $0.405

2019: $1.333

Incr: 229.1%

Median personal income (inflation adjusted), age 25-34[2]:

1977: $9,336

2017: $35,455

Incr: 279.8%

So rather than being 6x as expensive(!), bread is now ~15% cheaper relative to income.

Let’s do another one. Roundtrip flight on American Airlines Flight #1 (NY to LA)

1969

Cost: $304.50 (including tax)[3]

Avg wage: $3.31/hour

Hours to buy: 92

2020

Flight: $500-600

Avg wage: $23.87/hour

Hours to buy: 21-25 (!)

Another one:

In 1997, it took 1,768 hours of work at the median wage to purchase a Dodge Caravan. In 2018, it took just 1,396 hours of work, and the quality of the Dodge Caravan has also increased in that time!

[1] https://www.ers.usda.gov/webdocs/publications/41035/15334_ae...

[2] https://data.bls.gov/timeseries/APU0000702111

[3] https://www.timetableimages.com/ttimages/aa/aa67/aa67-02.jpg

[as300]

Right - so I think we are in agreement: Prices will rise, but purchasing-power of the average citizen will almost certainly increase (that is what I attempted to show by the poorly-written second paragraph).

> In 1997, it took 1,768 hours of work at the median wage to purchase a Dodge Caravan. In 2018, it took just 1,396 hours of work, and the quality of the Dodge Caravan has also increased in that time!

Interesting!

[bhupy]

I’d add that price rises for bread are less to do with the fact that more people have purchasing power, and more to do with the fact that bread today is of higher quality than bread in the 70s.

Ditto cars, appliances, clothes, etc.

[as300]

I don't think this is the case - I think inflation has caused the cost of producing bread to increase thus leading to higher prices. If anything it seems to me that bread is of lower quality these days - more GMO's and usually mass-produced using factory farming methods.

[IanCal]

This assumes companies will raise their prices, leave a large margin on top and have nobody try to undercut them.

[bhupy]

Yup, that too.

Businesses that just raise their prices would be leaving money on the table: namely the poor people that were outside of their total addressable market. Whereas before those folks would never have been able to provide revenue, with more cash in their pockets, they are now potential consumers. Increasing prices just maintains the same TAM for no real reason — you can make more revenue by serving the newly minted consumers.

[NovemberWhiskey]

I don't even really know where to start with this.

First of all, your income numbers are household incomes, not an individual number. A significant number of your 'unemployed' are actually children, carers/homemakers, who belong to those households. Other unemployed are e.g. retirees who often times do not have a zero income.

You're indicating an effective tax rate based on the idea that the tax only pays for the UBI. Don't you have to tax more than that to, e.g., run the rest of government?

Social Security costs about $1tn per year. Medicare costs about $600bn per year, which is about the same amount as Medicaid. Means-tested cash and cash-like programs (EITC, food stamps, SNAP, school lunches) are perhaps another $300bn.

Canceling those programs would fund most of your UBI but would be represent an amazing transfer away from the poorest/oldest, which I suppose was not really your intent.

Funding any portion of UBI through a VAT is also regressive: less well-off households spend a significantly larger proportion of their incomes.

[bhupy]

> First of all, your income numbers are household incomes, not an individual number. A significant number of your 'unemployed' are actually children, carers/homemakers, who belong to those households. Other unemployed are e.g. retirees who often times do not have a zero income.

That doesn't really change much, it just halves the payment amount from 18,000 to 9,000. As I closed out, we can play with different levels of progressivity and generosity, but the idea is the same — my math was just the starting point. You can increase the amounts that the top 2 quintiles pay, you can increase the amount that the middle quintile pays (which is how most EU states fund their programs). This also doesn't even touch payroll tax revenues, which comprise about 35% of Federal revenues.

Also, "Unemployed #1-5" includes children, the disabled, and seniors. In that 10-person nation, 2 were probably children, 2 were probably retired seniors, and 1 was probably prime-working-age disabled. They are accounted for in the above math.

> You're indicating an effective tax rate based on the idea that the tax only pays for the UBI. Don't you have to tax more than that to, e.g., run the rest of government?

That was never the implication? Per this specific tax distribution, at worst you would increase the tax on the top quintile by 37%. And that's at worst, because there are definitely parts of the existing government that can be replaced by the UBI.

> Social Security costs about $1tn per year. Medicare costs about $600bn per year, which is about the same amount as Medicaid. Means-tested cash and cash-like programs (EITC, food stamps, SNAP, school lunches) are perhaps another $300bn.

Yes, none of this changes the above math, which we built up from first principles. Again, starting from those numbers, you can play with varying levels of progressivity and varying levels of generosity.

> Canceling those programs would fund most of your UBI but would be represent an amazing transfer away from the poorest/oldest, which I suppose was not really your intent.

EITC, food stamps, SNAP, and school lunches are indeed important for the poorest among us, but the implicit argument is that a lump sum non-means-tested amount per-person is superior to all of those.

Medicare and Social Security on the other hand are already a form of transfer to the richest. Individuals above the age of 55 account for 75% of wealth in America. Put simply, old people are rich. For two-thirds of seniors, Social Security has detached from the program’s original mission — to eradicate senior poverty — and is now the world’s most expensive upgrade from Carnival to Royal Caribbean[1].

Yes, there exists old people that are poor, but targeting social programs strictly on the basis of age is an extremely inefficient method of distributing welfare, especially since most old people are rich.

> Funding any portion of UBI through a VAT is also regressive: less well-off households spend a significantly larger proportion of their incomes.

I don't disagree with you here, but it's just another proposal for how to fund a UBI, per OP's request. What I showed you is that it is definitely within the realm of possibility to fund a UBI off of progressive income/capital gains tax alone.

[1] https://www.profgalloway.com/iowat-the-fuk

[NovemberWhiskey]

>Per this specific tax distribution, at worst you would increase the tax on the top quintile by 37%. And that's at worst, because there are definitely parts of the existing government that can be replaced by the UBI.

No, you'd increase the tax burden by 37% of their gross income, which is a totally different thing.

Your highest quintile household earning ~$235K per year: if they lived in NYC they'd be paying already about $72K per year in taxes (between Federal/state/local income tax and FICA, assuming it's a married couple).

Your proposal takes an additional $85K per year away from them. It therefore increases their taxes by 118%.

EDIT: also, I just noticed the quintiles in your example don't even sum correctly. You're distributing $180K but only taxing $174K.

[bhupy]

> EDIT: also, I just noticed the quintiles in your example don't even sum correctly. You're distributing $180K but only taxing $174K.

That's my mistake, typo due to overly quick math. It's too late for me to edit the comment, but the missing $6K needs to be distributed across the quintiles. This doesn't fundamentally change the math at all, and hence does not invalidate the argument at all.

> No, you'd increase the tax burden by 37% of their gross income, which is a totally different thing.

> Your proposal takes an additional $85K per year away from them. It therefore increases their taxes by 118%.

You're saying that it (a little more than) doubles their taxes. I never claimed otherwise, I meant that the percentage would increase by 37%, at most — which would in effect double their effective tax rate.

I want to do the math just to give your argument a fair shot. In FY2019, the total outlays of the US Federal government was $4.45 trillion. Per capita, that's $13,500.

Let's assume that there's literally 0 overlap between a UBI and all existing programs — extraordinarily unlikely, but I'll play your game — and we wanted to maintain an $18,000 UBI. That's essentially a $32,000 in benefits (I'm throwing in an extra $500 just to make my argument that much harder).

Let's go back to our fictional nation, where there are 10 people that are distributed exactly like they would be in the US today. We'd need $320,000 across 10 people.

Unemployed #1-5: 0

Lowest: $13,000

Second: $30,000

Third: $40,000

Fourth: $59,000

Highest: $178,000

Total revenue: $320,000 (this time I double checked!)

Now, because, in this scenario, $13,500 is not actually cash money, but is going towards existing Federal outlays, the net pocketed amount isn't actually $32,000 — it is actually $18,500.

Unemployed #1-5: $0 - $0 + $18,500 == $18,500

Lowest: $13,775 - $13,000 + $18,500 == $19,275 (effective tax -39%)

Second: $37,923 - $30,000 + $18,500 == $26,423 (effective tax 30%)

Third: $63,572 - $40,000 + $18,500 == $42,072 (effective tax 34%)

Fourth: $101,570 - $59,000 + $18,500 == $61,070 (effective tax 40%)

Highest: $233,895 - $178,000 + $18,500 == $74,395 (effective tax 68%)

These tax rates are Scandinavia-level rates. The middle class taxes are also high, but that's also true in most EU countries. These are also approaching FDR level marginal tax rates.

All that being said, these high taxes assume that there is literally 0 overlap between a UBI and over half of the existing Federal welfare expenditure — extraordinarily unlikely. This also totally ignores payroll tax revenue, which is about 35% of total revenue. And this is assuming 0 VAT, which most of the developed world has in some capacity. It also assumes that we want to continue to provide targeted welfare for a sub-section of society that is, on average, among the richest (old people). It also assumes that we want to pay equal UBI to everyone of all ages, rather than providing half the UBI per child, or some such percentage — I.e. should a family of 4 receive $74,000 per year? I think not. This is the most generous UBI. Like I said, we can play with different levels of progressivity and generosity of the system itself — but the general idea is the same.

The above math should show that a net increase in effective tax rate to 68% is the absolute worst case increase in income tax, assuming 0 overlap and 0 alternative taxation (both very unlikely), and assuming a comically generous UBI. At the very least, it should also show that it is within the realm of possibility to fund a UBI through progressive taxation.

[teucris]

Such a great breakdown - thanks for this. Will you up an essay or blog post about this so I can link to it and share it? All the articles I’ve read don’t really get down to brass tacks like this.

[bhupy]

I have not, but I've been meaning to start an armchair blog! Perhaps this could be my debut.

[11235813213455]

I'd go in the opposite direction, no money, but free services (local organic food, bikes, and housing (water+electricity+internet), possibly a laptop too)

[gfodor]

The problem with this is that it undermines the end-game goal of UBI: efficient welfare powered by market forces. Any service-oriented approach would be different, and likely subject to the corrosive forces like corruption, cronyism, pork etc if deployed as national policy.

[RangerScience]

Perhaps a net of various social services for the safety and welfare of the people? Perhaps it could be called a "social safety net"?

There are a lot of reasons why people (myself included) think that UBI would be better than the welfare system we currently have, which is (AFAIK) like what you describe. Google around.

My favorite reasons to expect UBI would work "better" are: 1) drastically simplifies the government's part of the system, 2) works within the existing economic system, and 3) empowers people to make their own decisions about their own lives, needs, and wants.

[dahfizz]

Strongly agree. Any form of government-paid safety net is actually an inefficient UBI in disguise.

By giving the money directly to people, they get to spend it how they want. By definition, they are extracting the most value possible from that UBI. If you instead give them goods + services through a government agency, you also have to pay all the bureaucrats and you are limiting the choices the recipients now have.

[luckylion]

> drastically simplifies the government's part of the system

But the government's part of the system is absolutely insignificant.

> empowers people to make their own decisions about their own lives, needs, and wants

I get that. But I also have a neighbor that will spend the cash component of the welfare he gets within the first 10 days of the month. If he got cash only and had to pay rent himself, I'm certain that he wouldn't. Obviously we can't let him be homeless, so the state would jump in and pay his rent. On top of giving him the money to pay his rent. That would obviously be an improvement for him (+700€/month to spend), but I don't see how it would be sustainable.

[dahfizz]

> But the government's part of the system is absolutely insignificant.

The easiest data point I could find is that the Executive branch spent $228 Billion in 2010 on government salaries, excluding the military and USPS[1]. That's almost $700 per person per year if you converted it all to a UBI. That's far from insignificant.

> But I also have a neighbor that will spend the cash component of the welfare he gets within the first 10 days of the month. If he got cash only and had to pay rent himself, I'm certain that he wouldn't

I don't see why I am obligated to pay for someone who refuses to take care of himself.

[1]https://www.washingtonpost.com/blogs/federal-eye/post/how-mu...

[luckylion]

> That's almost $700 per person per year if you converted it all to a UBI. That's far from insignificant.

Right... but introducing UBI won't remove the necessity of the department of energy, or somebody sitting in an embassy in Russia, or the person who orders toilet paper for the Library of Congress.

We'd save money on administrative overhead for the programs that are supposed to be replaced by UBI, but those salaries aren't what's eating the budget.

> I don't see why I am obligated to pay for someone who refuses to take care of himself.

I don't either, but we're a tiny minority. Well, at least in my country we are, in the US it may look somewhat different.

[RangerScience]

> system is absolutely insignificant.

TBH I don't know. How much money is spent determining whether or not someone is eligible for welfare? How much is spent on sourcing vendors and distribution?

> have a neighbor

Ehhhhhh lot of things going on here and lots of ways to look at it. I can think of a bunch of ways to make this work out, but ultimately, it's a Chesterton's fence issue: without understanding why things are the way they are - which you'd only get by engaging with the person - any solution is both likely to fail, and likely to result in disempowerment; contributing both to an immediate failure and, I'd expect, many future failures.

If UBI resolves, to pull a number from no-where, 90% of the issues social workers are needed for, now you've got 10x the social workers to do that engagement with your neighbor.

[luckylion]

> TBH I don't know. How much money is spent determining whether or not someone is eligible for welfare? How much is spent on sourcing vendors and distribution?

Probably a lot in absolute terms, but insignificantly little in relative terms, i.e. if you pay somebody (in cash or in rent or vouchers) $1000, you're not adding $1000 on top. Romney claimed as much in 2012 and the numbers don't support it [1]. Money quote: Combined federal and state administrative costs range from 1 percent to 10 percent of total federal- and state-funded program spending.

That's considerable, but it's not going to fund UBI, especially not if there's an expansion beyond those that currently receive money from the programs.

> If UBI resolves, to pull a number from no-where, 90% of the issues social workers are needed for, now you've got 10x the social workers to do that engagement with your neighbor.

True, but we've tried "increase the number of social workers" in Germany, and it didn't help. After all, you can only achieve so much with offered help. If you want change, you may have to force it. It's similar with drug addicts: you absolutely can get them clean, but only if they want to (and want it enough to stick it out, as it's not a fun process even with help and support) or if you force them. Simply building rehab centers alone isn't going to do it.

I'm not a fan of UBI, I believe it will be a terrible thing medium to long-term and will create a permanently unproductive under-class with zero agency that requires constant adult supervision. I do believe in a Universal Right To Work, though. Guarantee them a job, even if it's not a productive one but merely picking up trash, visiting lonely elders or explaining directions to tourists, and pay them in return. It changes the dynamic and you keep a habit of exchanging work for money (and getting out of bed), and it has basically none of the moral hazards of UBI, does not incentivize not-contributing, does not require closing your borders immediately after introducing the policy etc. I'm sure it's hard to work out as well (e.g. you don't want the state to ruin markets etc), but I believe it's a much better approach, and it's also much easier to sell to those that will have to fund it (which, let's not kid ourselves, are never going to be the 1%, the international corporations or those that inherit large sums of money, but the average worker).

[1] https://www.cbpp.org/research/romneys-charge-that-most-feder...

[lend000]

Assuming taxes rise proportionally to cover the bill, there should be no inflation -- in fact, it would even have a slight deflationary effect (all other economic factors being equal) due to deadweight loss.

Whether the nation is wealthy enough to sustain that tax load yet is uncertain. Market caps and national wealth values on paper break down when huge amounts of wealth needs to be liquidated to service new taxes. Even so, I think it probably is, with a clean restructuring of our tax brackets, but we have a lot of other debt to service first. Of course, in reality, if this ever gets legislated it will only be adding to the already staggering deficit.

Whether or not the politicians whose voter bases rely on UBI can be trusted to keep the UBI at a reasonable level (i.e. enough to survive in rural areas but not going to cut it if you want to live in west Los Angeles and not have a job), is a more contentious point to me.

[valuearb]

It will be paid for in inflation.

I’m a fiscal conservative but I don’t think the inflation caused by UBI will be any worse than the inflation caused by massive deficits due to military spending and other misallocations of resources. In fact UBI might be better, given it’s spent on actual human needs rather than military hardware that is 90% useless in our present world.

But UBI is still stupid. Paying people for not working is a method of producing less, ie making us poorer. I always wonder why the dorks who go around promoting UBI always seem to ignore the earned income credit, which is our best tool to reduce poverty. Why don’t they ever march to massively increase that?

[danans]

> I’m a fiscal conservative but I don’t think the inflation caused by UBI will be any worse than the inflation caused by massive deficits due to military spending and other misallocations of resources.

It's sincerely good to see a fiscal conservative acknowledge this. That said, I'll take a contrarian position (to my own beliefs) and question whether that military hardware is really so useless.

> I always wonder why the dorks who go around promoting UBI always seem to ignore the earned income credit, which is our best tool to reduce poverty.

UBI is also intended to deal with the emerging reality of routine jobs being lost to automation, and to increase the leverage of workers who would be able to be choosier in the job they take (a good thing), thus putting upward pressure on wages at the lower end of the income scale.

When there is no job, there is no earned income to take the EITC on.

[valuearb]

Automation has always created better new jobs to replace the ones it’s eliminated for 10,000 years straight. Why would that change now?

[danans]

To re-quote the adage about the automobile replacing the horse-and-buggy - the workers today (especially those lower/ more automatable skills) are what the horses were then.

[opo]

I see this analogy quite often, but I think it isn't very useful. Horses didn't have agency - horses weren't able to apply for other work, couldn't retrain themselves, weren't able to move to somewhere where they might be employed, etc. Saying workers are like horses and are helpless to do anything to help themselves isn't accurate.

This isn't to say that all (or even most) workers will be able to adapt to losing their job to automation or what can/should be done to help them.

[danans]

> Saying workers are like horses and are helpless to do anything to help themselves isn't accurate.

Not all workers, but for many workers, this is the case. Very few coal miners have been able to retrain as software developers, despite earnest efforts on the part of some organizations in coal country.

They could try to get manual labor work in another industry, but industries to which their skills are readily transferable - like manufacturing and construction - are also automating many of the most menial of jobs. A modern factory employs far fewer workers per unit of output than those of even the recent past.

Skilling-up to the point where you have value to the new economy isn't as straightforward for many workers as it seems like it should be to many of us already in the new economy.

I'm not suggesting that they are like horses in that they will be sent to the glue factory, but lots of people in that sort of position have seen their quality of life - and that of their communities - suffer a great deal over the decades of deindustrialization.

[bryanlarsen]

Saying UBI is causing the inflation is disingenuous. It's the deficits that cause inflation. If UBI is fully paid for with new taxes, it won't cause inflation.

[whatshisface]

I think it would be fair to say that UBI causes inflation and to also say that taxation lowers inflation.

[danans]

Any government spending (whether for UBI or missile systems) not paid for with taxes increases inflation, but there are lots of countervailing forces that mitigate it, not just taxation, the largest factor perhaps being downward wage pressure on workers.

[jopsen]

> What's stopping prices from rising accordingly?

I'm still on the fence about UBI. But many of the things poor people would buy with this money is: food, clothes, ordinary household supplies, electricity, phone subscription, internet, etc.

Today, many of these things aren't necessarily priced based on supply/demand, at-least I rarely see prices fluctuate. I assume because our hyper-industrialized/semi-automated countries we can easily manufacturer as can be sold.

So instead stuff is priced based on what the _targeted customer segment_ is willing to pay. Hence, prices might not go up just because the customer segment grows in size.

[jopsen]

Arguably, there are things like housing which may play out differently.

UBI without regulation, or some sort of gradual phasing-in would probably not be sound :D

[Avicebron]

The most common explanation given to me is restructuring and siphoning money off of futures and taxing wealthy US companies that previously have not been paying taxes.

[jandrese]

While a great idea in theory, said companies are adept at moving money around to avoid paying taxes. Is it unthinkable that a company would move its HQ down to some island nation to avoid several billion in taxes? I don't think so. And there will be endless arguments about how foreign companies that don't pay into that system are going to be more competitive.

One could maybe avoid the problem a bit by implementing a tariff on every import that calculates the man-hours put into a product and adds a fee based on how much UBI that would be if it were made by Americans, but that's hideously complex and still wouldn't help companies that want to export their products worldwide. Ultimately markets don't care about the general welfare of the people and are frequently at odds with schemes like this. Unfortunately we don't really have a better solution. Command economies don't work at scale.

[Avicebron]

It's not impossible that those companies would try, but it's not impossible that strict legal action could prevent it at least in theory. I think that if we just acknowledge markets don't care about the welfare of people than we have a commonly agreed upon problem. Should it be morally acceptable to put our hands up and say, luck of the draw, some will die deep in medical debt and others get to become horrendously wealthy. As a species I hope we have progressed enough to move past that base thinking.

[jandrese]

Strict legal action can't prevent them from being undercut by foreign competitors.

[Avicebron]

I'm not saying that there wouldn't have to be other changes to manufacturing practices, import and tariff practices, but I think the framework we go into the problem with. E.G. are people important or our markets important makes a difference in how someone comes up with a solution.

[nikanj]

Two can play at that game, and if the HQ is moved to a small island, the company can be hit with import tariffs. As long as the customers still remain in the US, the US can extract tax from the transactions.

Not saying they're willing to extract taxes, as we've seen time and again, but very much able.

[machinehermit]

Not to mention it improves their well being exactly because they are better off relative to the people who are not getting UBI.

I forget what the conjecture is called in economics that UBI would essentially all be captured by rent and housing prices.

I don't have to think about it very long to see how obvious that is.

[bhupy]

That is only true in markets where there is an artificial supply scarcity. In markets with proper zoning reform, rents and housing prices will NOT increase over the long run.

But you're right that there exists markets (like SF) where this is simply not the case. What happens there? Take your thought one step further: if everyone received $x per month, and rent and housing prices increased by $x, then in that worst case scenario, the TAM doesn't actually change, I.e. if I was able to afford a house today, I would be able to afford a house tomorrow.

If I was unable to afford rent today, I would not be able to afford rent tomorrow however I would now have cash to be able to afford to move to a more affordable market. This seems like a strict win to me.

[asabjorn]

In the end money is worth nothing if no one does work for it. Low income workplaces are demonstrating the issue with UBI: people were angry at business owners for taking small business loans to keep doors open and employees preferred unemployment checks.

[jjfreedom]

If the UBI funds are taken from tax dollar (aka force) then it doesn't matter if it "works" because it's immoral. If you are saying force is moral. Then we have bigger problems than $500 a month.

[toomuchtodo]

UBI funds need not be taken from tax dollars. Taxes destroy money. Central banks create money. UBIs are funded through currency devaluation. Inflation, if edge cases are properly managed with cost controls (healthcare & education) and regulation (housing), is manageable.

We will print regardless (See: Japan, Fed, ECB), we're just arguing over which fiat bits end up in which accounts.

[chillacy]

That's not always true, a UBI doesn't say anything about its funding mechanism. Some UBI proposals are indeed funded on tax revenues and thus revenue neutral.

[toomuchtodo]

Corrected.

[ghostwriter]

Central banks only print paper, the money is created by creators of value, and about half of that volume of value is being taken away from them by taxes.

[jopsen]

I think GPs argument is that the demand for dollars is so high that you can print them with few repercussions (inflation).

[toomuchtodo]

Precisely.

[ghostwriter]

Inflation steals future opportunuties from those who save money, and it generally steals future from new generations to come. When a family opens a bank account for their newborn child to use it for paying for their higher education, they do it in a hope that this money will preserve its value.

[chillacy]

I think I've heard that argument made by a "sovereign citizen" once in a youtube video. It ended with them being tazed and booked by a police officer for noncompliance.

[SubiculumCode]

"pay for" misunderstands how money works. Giving the benefit of the doubt, I'll take this to mean, how do we offset the inflation hypothetically caused by increasing the circulating money supply. I'd argue that a UBI would only mildly affect inflation for many goods and services, save housing, and could be effectively offset with a mild to moderate taxation.

[eanzenberg]

What, you want implementation details? I want my money now!!

[rzwitserloot]

Well, look at it with a macroeconomic point of view. Or, if you prefer, you, playing Civilization, with the actual economy as your world map.

Money doesn't represent anything inherently - it has no meaning other than what the participants in the economy ascribe to it. It's a useful tool to enable trade.

So forget about money in terms of € or £ or $ for a moment. If you want to buy a fancy new TV, someone has to mine some precious materials from the earth, someone has to melt some plastic into a nice shape, someone needs to write some software, yadayada.

How do we get society to mine materials, melt the plastic, and all that, in a way that nicely optimizes happiness, productivity, and investing in the future?

If 'UBI' is the right answer, then we should do this with UBI, and society can then therefore pay for it. Because if the system can productively ensure that the TVs are rolling off of the belt, and today's societies (at least in the west) seem to be economically viable, then there must be an economically viable model, too, for the UBI world. Money is just a tool; adapt the tool to properly do the job that you require of it. Don't adapt the job around the tool.

Let's say you spend a lifetime driving a truck around. a long, storied career of 55 years. Sounds nice and productive, but it feels a bit pointless if someone could have spent ~100k, once, and created a robot whose running costs are maybe €500 a year and could have done your job. better, even.

That trucker could be doing something more productive. Or not - society can support this trucker now, getting paid to drive a truck around. Therefore society can support the same trucker at the same level (minus 500 bucks a year) with the trucker doing nothing whatsoever.

I'm pretty sure that's reality already. Right now it sure feels like society is spending a million or two on that trucker over those 55 years (a salary of €40k a year, benefits and all that, traffic accidents caused by humans on the road, and more - oof, that is easily going to hit a million, no?) - on something that a robot can do for a fraction of that. It's inefficient. How do you pay for UBI? By the gains of optimizing this stuff away.

But the trucker needs a society that doesn't look down upon someone who now has no work at all, and needs a way to still get the psychological benefits that work brings. These things, too, are optimizing moves: Happy people are surely better for the economy, and 'happiness' should be a goal in its own right.

Here's a simple thought: If everybody gets a UBI that is enough for the basics and a little luxury on top of that, then all jobs are themselves a luxury thing. At that point, you can start taxing all income, starting at the very first penny, at 60%. You never risk taxing the population so much they go homeless or have adverse health effects, _IF_ we posit that UBI covers all basics already.

Then, making UBI affordable is a matter of tweaking the 60%. Tweak it to 90% if you have to; people are motivated to work for reasons other than money, and 10% of some number is still more money than people without a job (solely UBI) would get. Taxation, especially in europe, _WAS_ at those levels after the second world war and people just worked, so, any claims that incredibly high income tax levels means nobody would work are [citation needed]. All the research I've seen suggests 60% will more than take care of it, but it's just a number on a dial. You can rotate the dial, society isn't going to break if you crank it up.

Now, how do you _politically_ make this happen? I have no idea. But busting some myths and adding more research to the pile probably helps, no?

[ivalm]

It is paid for by a net positive tax reform. My preferred would be something along the lines of wealth tax (I don’t want to tax productivity, ie income, but I have little sympathy for passive hoarders of wealth; I understand there are major legal and logistic hurdles; my current pet approach would be something along the lines of significant interest rate increase (to make money more valuable) combined with significant quantitative easing (essentially taxing money)).

[thorwasdfasdf]

There isn't nearly enough wealth to make that work. I've already run the numbers on this. Even if you taxed every last billionaire in the US and stole their entire net worth and divied up all their wealth among every US citizen, it would still only be 300$ a year per person over 30 years. It doesn't work.

The problem with the world isn't distribution of wealth. The problem is NOT enough wealth in the first place. We need to concentrate on addressing that problem.

Also, gov is already such an enormous burden on people in the US. Right now almost 40% of US GDP is gov spending. that means the average person is loosing 4 out of every 10$ their earning. And, that's just the average. I'm sure in coastal areas the burden is much much higher.

[Dylan16807]

Money goes in circles, so I'm not sure how useful a comparison that is. And there's a ton of rich people that have 8 or 9 digits of wealth, too.

> that means the average person is loosing 4 out of every 10$ their earning. And, that's just the average.

Yeah, that's just the average. The median person is paying less, and should be paying even less than that.

[rainyMammoth]

Andrew Yang's argument is that a lot of people already receive some level of help from the state (food stamps, unemployment, etc) which would be transferred to cash instead. So you need to account for those as well.

[labcomputer]

I don't get it: So the idea is to help the middle class at the expense of the poor?

It sounds like you're saying that people who depend on food stamps and unemployment will see a smaller benefit under UBI than people who earn enough not to require those benefits.

[rainyMammoth]

I'm not sure I understand what you are saying. The way I understood his argument is that it would remove all the existing social aids such as unemployment benefits, food stamps etc and replace all of those with UBI. This means that everyone would get 1000$ a month. 1000$ a month is MORE than what you would get with food stamps etc so the "poor" are coming out of this ahead.

1000$ a month was chosen because you are supposed to be able to live with that amount. I would expect to be extra allowances for children etc.

There is no such thing as "at the expense of the poor" here. Everybody gets it. If you are middle class it comes out directly out of your taxes anyway. It is a minimum income that should help you decide to start a new career or create a small company for example, now that you know that whatever happens you will always get 1000$ a month.

[Avicebron]

This, it's partly a flywheel to generate more maneuverability therefor innovation and business creating risk taking. Adding to the economy, not detracting.

[ivalm]

The middle class will also pay additional taxes (although less than their ubi). UBI is basically an offset to the curve of progressive tax rate.

[ivalm]

Why limit to billionaires? Total net assets in the US ~ $270T, so you can pay for UBI and balance the budget with under 2% wealth tax.

The real problem is how to realize this tax. I think it is probably too hard to actually appraise everything/etc; thus something like a monetary policy might be appropriate. The problem here is that USD is not in a vacuum so side effects might make this impossible.