[blueterminal]

Wouldn't nationwide UBI just make everything more expensive? Most people who work will continue to work, most people who don't, won't. More money in circulation = higher prices.

If you care about poor people, why not just try to fix welfare with e.g. Negative Income Tax proposed by Milton Friedman (https://en.wikipedia.org/wiki/Negative_income_tax)?

[dragonwriter]

> Wouldn't nationwide UBI just make everything more expensive?

Not “just” and not “everything”, but yes.

> Most people who work will continue to work, most people who don't, won't.

If UBI replaces or offsets, in whole or part, minimum wage, it probably increases employment immediately. The reduction in labor market friction and perverse incentives of means-tested welfare probably increases it in the long term. So, I wouldn't be confident in that description.

But even in the usual “funded by high end taxes” formulation, it increases velocity of money in the domestic economy and consumption spending, so it should produce some upward price pressure. The basic upshot of this is that the downward redistribution will compress outcomes, but raise the bottom so that less that would be assumed if you took the benefit level and compared it to pre-policy price levels.

> If you care about poor people, why not just try to fix welfare with e.g. Negative Income Tax proposed by Milton Friedman

NIT and UBI funded by progressive income taxes are identical policies.

[twblalock]

> NIT and UBI funded by progressive income taxes are identical policies.

Not really, because under UBI, literally everyone would get money from the government, hence the "U". If you remove that feature of the system it wouldn't be UBI anymore, it would just be yet another means-tested system. Unlike UBI, Friedman's negative income tax would phase out and not everyone would be eligible. With NIT, some people would get money, some would pay no taxes, and some would pay taxes.

[dragonwriter]

> > NIT and UBI funded by progressive income taxes are identical policies.

> Not really, because under UBI, literally everyone would get money from the government

Yes, really; every possible NIT is exactly equivalent to some combination of UBI + some configuration of rates of positive income tax brackets in a progressive system.

> With NIT, some people would get money, some would pay no taxes, and some would pay taxes.

With a UBI in a system that also has progressive income taxes, some people would get net money, some people would break even between UBI and taxes, and some people would pay net taxes.

UBI + progressive income taxes = NIT.

[luckylion]

> Not really, because under UBI, literally everyone would get money from the government, hence the "U". If you remove that feature of the system it wouldn't be UBI anymore, it would just be yet another means-tested system.

The idea of UBI is that everybody gets it, but many/most of us will pay higher taxes that send it right back. It'll just add a little bit of overhead by moving the money around, but you don't get to keep it.

[twblalock]

> The idea of UBI is that everybody gets it, but many/most of us will pay higher taxes that send it right back. It'll just add a little bit of overhead by moving the money around, but you don't get to keep it.

That's the worst sales pitch I've seen for it.

If most of us won't benefit, then most of us won't support it. How would it be different from one of the many means-tested welfare systems that already exist?

[dragonwriter]

> How would it be different from one of the many means-tested welfare systems that already exist?

Net tax payers won't be paying for a huge administrative bureaucracy whose entire purpose is the inefficiency of duplicating functions already performed by the progressive income tax system, namely, means testing.

Also, unlike the aggregate of existing means tested welfare programs, it won't have ranges where the rate of net loss of benefits from additional outside income exceeds 1:1, eliminating some very perverse incentive. Also, instead of effectively a mostly very high (but wildly varying with small variations in income) marginal “tax” (actually, benefit loss, but it amounts to the same thing) rate across the low income range from the means-testing impacts of public benefit programs with a drop to the low end of a system of progressive marginal rates after that, you'll have a system progressive across it's entire range, minimizing in an even more general sense the degree to which you are expending resources to inhibit the ability of people to move up and out of the bottom.

It's true, if a UBI is fully funded by increases in existing progressive taxes, not everyone will get net nominal income increases, but I think if one has a decent concern with what is being done with tax money, they still benefit.

OTOH, even if UBI is done by printing money and not funded in the fiscal sense at all, not everyone will have net real income increases, and the people that lose are the people with the smallest proportional increase in nominal income, e.g., the same people at the high end of the income scale that would lose if taxes were fubded by increased high-end taxes in a progressive system.

[twblalock]

> Net tax payers won't be paying for a huge administrative bureaucracy whose entire purpose is the inefficiency of duplicating functions already performed by the progressive income tax system, namely, means testing.

You know that's not what would happen, right? We would end up with our existing systems plus UBI for a long time, because people would not be willing to abolish the existing systems.

[AnthonyMouse]

Means tested welfare works like this: You get $12,000 in stuff, then if you make $20,000 in income they take it all back, so you're effectively paying a ~70% marginal tax rate on your first $20,000 in income (including the ~10% you pay in actual income tax). Everybody, even if you make $90,000/year.

With a UBI, you have an ordinary tax system that isn't secretly putting higher marginal rates on lower income levels, so then e.g. everybody pays a 30% flat marginal rate. But if you're in the middle your effective rate is lower, because the UBI phases out slower -- you only paid 30% on your first $20,000 in income rather than 70%.

You were paying net taxes to fund welfare already, but now you're not paying as much and someone who makes more money than you is paying more.

Moreover, what people receive is cash rather than stupid garbage like housing projects that turn into slums (but that you still had to pay for), which makes what they receive more efficient (they can buy what they need instead of what the central planning committee thinks -- and you don't have to pay the salaries of the central planning committee or the means testing bureaucracy), which means it costs the taxpayer less for the same level of assistance.

It's a much less dramatic change than people seem to think it is, and creates a greater incentive for lower income people to work because people get to keep 70% of the marginal dollar instead of 30%.

[leoedin]

Benefit is a very broad word. Maybe you don't benefit financially, but you benefit in other ways. It's rather reductionist to assume that the only people who will support UBI will benefit financially from it.

Means tested welfare is a problem because it actively disincentives working by reducing or removing benefits as you increase income from work. It effectively reduces your hourly wage. Trading 40 hours of your time a week for work, when the effective wage of that work is about half the minimum wage, is a pretty poor tradeoff. It creates a benefit trap.

UBI has none of that. Sure, the payment from UBI is eventually matched by tax payments, but there's no sharp threshold. (Of course, UBI has to be pared with a sane progressive tax structure which doesn't also provide sharp discontinuities in tax).

[joseluis]

Simplification, a lot of reduction in bureocracy and fraud investigation... since everyone applies by default. More freedom for the individuals since their benefits are no longer tied to having to jump through hoops or demonstrate how incapable they are...

[zajio1am]

> If most of us won't benefit, then most of us won't support it.

Well, i hope that there are many people who choose their preferred policies based on how these influence society as a whole and not just whether they would profit from them personally.

[CrazyDave]

Funding UBI through "printing" money would cause inflation because that increases the money supply. But most UBI proponents plan to fund it through new taxes and consolidation of the current "means based" welfare programs.

[csunbird]

Which means the productive members of the society will be paying even more taxes, just to feed off people that think living of the UBI is good enough for them, if the UBI is not funded through the printing of the money.

How is that fair to working people with ambitions?

[imtringued]

What about unemployed people with ambitions?

[drran]

They can start their own business.

[ChuckNorris89]

Ok, and who/what will you tax for the extra UBI money?

Can't tax the corporations and the rich or else they will "move elsewhere and increase unemployment" as we're made to believe so why then do I fear that the middle class worker will be hit yet again?

I'd rather we lower taxes on the workforce than increase them to give away free money.

[CrazyDave]

For simpler math, lets assume someone makes $10k per month pre-tax. Their tax rate would increase by roughly 10%, and they would receive a $1,000 check in the mail. The net cost (and benefit) for most people could be 0.

Well, why do UBI at all?

I think the goal is to simplify our means based well fare system, which can create some economically inefficient incentives.

For example, imagine someone receiving disability checks who could go back to work. Going back to work would mean they stop receiving disability checks, and they could easily end up reducing their income.

[drran]

> Well, why do UBI at all?

Well, later it's possible to vote for a candidate, which promise to reduce taxes by 3x and increase UBI by 3x, like at Alaska: https://www.vox.com/future-perfect/2019/9/5/20849020/alaska-...

[akie]

Increase taxes on wealthy people and give it to poorer people so that almost everyone is better off. How is this a bad idea again?

[drran]

Why not to increase taxes on poorer people and give it to wealthy people, so that almost everyone is better off? How this is a bad idea again?

[_Understated_]

How do you define "wealthy"?

[adrianN]

People who make more than the median.

[blueterminal]

It is a great idea but seemingly impossible to implement successfully. Has it ever been successful?

[adrianN]

There are various taxes that work that way. Depending on how high they are (and how high the taxes that work in the opposite way are) it works better or worse. The difference between rich and poor is not the same everywhere on the planet.

[AdrianB1]

Then rape the women and molest the children in the process, then kill them all when you're done; it is as moral as your proposal, just finishing the sentence. "How is this a bad idea again", you say?

[dang]

Would you please stop posting ideological flamebait to HN? We've asked you before, and you've done it twice in the last 24 hours. Not cool.

The GP comment wasn't great either but this was much worse.

https://news.ycombinator.com/newsguidelines.html

[AdrianB1]

Sorry, it is not by intention, probably cultural difference interpreting the same words in different ways. What is the second comment that looks out of line?

[blueterminal]

There are 209,128,094 people over 18 in US. Let's assume $1,000/month UBI. It would mean we need to get $209128094000 (~ $210B) a month ($2.5T a year) from somewhere.

Where would we get it from? Are there any extensive papers explaining it? I'm super curious.

[markvdb]

Of course it will cause some kinds of inflation. Just as zero interest rates also create inflation (stock market, housing, ...). UBI would certainly create a different kind of inflation.

Negative income tax would probably not work as efficiently. What if it takes a year and a half of administratoin for the negative income tax to reach people living hand to mouth? That's a very slow tool to get money into everyone's hands...

[lmm]

> Wouldn't nationwide UBI just make everything more expensive? Most people who work will continue to work, most people who don't, won't. More money in circulation = higher prices.

UBI would have to be funded by a corresponding increase in high tax brackets.

> If you care about poor people, why not just try to fix welfare with e.g. Negative Income Tax proposed by Milton Friedman (https://en.wikipedia.org/wiki/Negative_income_tax)?

That's like UBI for people who can hold down a minimum wage job, but it does less to help the very worst off. Why do you prefer it over UBI?

[balfirevic]

> That's like UBI for people who can hold down a minimum wage job, but it does less to help the very worst off.

Actually, it is exactly like UBI, under NIT you also get money if you don't have a job.

[kuang_eleven]

Negative income tax is an implementation of a basic income!

[blueterminal]

Yes, but only for the poorest. And I think only they need it.

[kuang_eleven]

It ends up being functionally the same, with the possible exception of how often the money is dispersed.

A UBI and a negative income tax can end with the exact same amount of net money dispersed to anyone, it just requires tweaking the income brackets and rates.

[imtringued]

Okay so why not focus on negative income taxes then? If they are functionally equivalent and governments already have experience with them why not do away with UBI?

[thinkingemote]

Do prices rise when consumers have more money to spend? Is consumer inflation tied to employment rates? Does inflation slow when poverty grows?

Intuitively it kind of makes sense that everything would get more expensive but if you consider millionaires spending on stocks, the stocks don't rise in price when the millionaires get more money, they are kind of independent. I think the same for poor people. Prices shouldn't rise because more people can afford to buy something but it makes sense that some would rise prices as more people will be able to afford the product. I guess the market and competitors is meant to keep prices down.

[simonh]

Price is driven by the relationship between supply and demand. More money to spend means increased demand (assuming it isn't all saved), but if supply can increase to meet it that doesn't necessarily mean prices have to rise. If there are bottlenecks in the supply chain yes prices could go up, but also efficiencies of scale can even push prices down depending on the product.

Regardless of any change in prices of those goods there will be more economic activity to meet the demand. That economic activity comes from somewhere and could increase costs, and therefore prices elsewhere in the economy. So I think some inflation is inevitable.

The rise in stock prices since the pandemic crash is largely driven by the increase in the money supply. That money sloshing around has to go somewhere, and it's poured into stocks. This is because people aren't spending as much in the lockdown, so the excess money is going into savings.

[Guthur]

This feels very much like a false dichotomy. Many millionaires, I assume we mean the extremely wealthy, have the majority of their wealth tied to the extreme growth of stocks based on some extreme economic forces. E.g. bezos with Amazon, Bill gates with Microsoft etc. And so some how comparing that to standard consumerism seems a little off.

[thinkingemote]

Yeah the millionaire thing feels off to me, but the idea behind it.... Do prices for consumer goods rise when there are more consumers?

Do things rise in price when the people who usually buy the things have more money?

Are things more expensive in more populated areas or less?

[imtringued]

Come on, that is basic supply and demand. The only confusing part is that inflation is often considered to be it's own independent thing and it can be controlled exclusively through e.g. the central bank when that's really not the case.

Consumer inflation = price of consumer good increases

Consumer deflation = price of consumer good decreases

demand exceeds supply = price of consumer good increases

supply exceeds demand = price of consumer good decreases

Now use these four basic definitions to answer your comment.

>Do prices for consumer goods rise when there are more consumers?

more consumers = more demand

UBI = less people work = supply stays the same or goes down

In this scenario "demand exceeds supply" is true. Prices do rise and that rise is called inflation.

>Do things rise in price when the people who usually buy the things have more money?

Again. UBI = less people work = supply stays the same or goes down

more money = more demand

People may buy more than one product if they can afford it or they may buy a higher quality one.

In this scenario "demand exceeds supply" is true again. Prices do rise and that rise is called inflation.

If you were to introduce price controls and set a maximum price for TVs then it is possible that one person buys 3 TVs and two other people can't get a TV at all. The answer is to raise the prices until everyone who wants a TV can get one.

>Are things more expensive in more populated areas or less?

Well, it depends on what "things" you are talking about.

A UBI does not influence the amount of land available so the supply of land would be fixed but the amount of money being received through UBI grows with a greater number of people.

supply = stays the same

demand = increases as more people live in a community

Therefore we see inflation in land prices.

If you were talking about something like an iPhone that can be manufactured in China and then shipped to New York then no, it would not cause inflation because denser populations do not prevent the Chinese (or any other company that's operating outside your city) from building bigger factories and thereby increasing supply to match demand.

supply = increases with demand

demand = increases as more people live in a community

[AdrianB1]

Do people learn the basics of economy in schools these days? This matter is well explained there, much better than a HN comment can do it.

[imtringued]

>Do prices rise when consumers have more money to spend? Is consumer inflation tied to employment rates? Does inflation slow when poverty grows?

Pretty much, but that's not a flaw of UBI, that's how the economy works and if the amount of UBI is picked carefully by skilled economists it would be very easy to achieve the desired amount of inflation. Everyone is somehow scared of inflation because we have been in deflation or at least near zero inflation for at least a decade.

[blueterminal]

> Prices shouldn't rise because more people can afford to buy something.

Of course they should, and they would. It's really econ 101. More demand = higher prices. Why wouldn't it?

If you were selling apples for $1/kg, and you have it sold daily very rapidly, wouldn't you try to make $1.1/kg? $1.2/kg? $2/kg? Until you can't sell everything you produce, or, more precisely, until you can't make more profit.

[tonyedgecombe]

Only when supply is constrained.

If a grocer tried to double their prices then their competitors would out compete them.

Property in SV might be a different matter although I’m guessing this is going to be cost neutral for most people there or even negative.

[AdrianB1]

It depends on the percent of people on UBI; if it is 5-10% it will be injecting money on the market without products and services to match; if it's 80% it will make everything a lot cheaper because the demand-supply will shift to cheaper products that 80% of the buyers are looking for. Think about the 5000 Euro car Renault built and sold in Europe while their other cars were selling for 20-30,000 Euro.

[akvadrako]

NIT and UBI can be functionally identical, depending on the income tax curves.

https://www.scottsantens.com/negative-income-tax-nit-and-unc...