The money isn't pulled out, though. It is redistributed to people, many of whom will immediately spend it, and others will invest it in various (hopefully efficient) ways.
> Why would a national government do this?
The problem of entry and exit. Say one state like Massachusetts implemented a UBI. Then we could expect many people to move to MA from surrounding states, or do whatever they can to have a legal address there. However I think there are possible solutions to this and a state-by-state implementation is actually possible. For example, Alaska has their dividend program and I think the results from that have been quite good.
> I don't think we need to be paying anyone who makes over 50k
I think I agree which is why I'm more in favor of a negative income tax or other means-tested system than true UBI. But if I were to argue in favor of an "everyone gets the same" program I'd say something like, implementation is somewhat less complicated, or it's easier to explain to the public.
Work is how you learn and often have some kind of basic dignity and meaning, not to mention how you eventually move up to better positions.
This is essentially what the Earned Income Tax Credit is, and what should be expanded rather than something that would dis-incentivize working at all.
$3.8 trillion would be about right if you set the benefit level equal to the poverty line for a single-person household, and then gave it to every many, woman, and child in the country, starting at birth, irrespective of citizenship or immigration status, while...
> That's nearly 20% of America's GDP.
...nearly 20% of GDP would be accurate for the benefit level you suggested, if you instituted it at that level today. Anything phased in over time would be lower even when fully phased in, because GDP growth per capita over the long term is more rapid than inflation.
If instead you took the poverty line for the median household size, divided by the median household size, and assigned that as the per person benefit (and still had no citizenship/immigration status test, and no phase in period, you'd drop the cost to about $2.2 trillion, or about double existing combined state/federal welfare spending.)
Any reasonable UBI will also be restricted to those legally present (and quite likely only LPRs, citizens, and nationals of the United States; maybe only citizens and nationals) and not initially start at a full poverty support level (meaning other programs will phase out rather than be big-bang eliminated.)
> Scope. I am of the opinion that one of the beauties of federalism is that policies can be tested first at the state level before we commit our entire nation. Why would a national government do this?
Because without authority for immigration controls, migration for benefits is a problem.
> Necessity. I don't think we need to be paying anyone who makes over 50k (maybe not the right number, but there should be a cutoff). That just takes money away from those who need it.
Means testing is additional bureaucratic cost to serve the same function that can instead be served by tax allocation, and you already need income-verification bureaucracy and income sensitive formulae on the income tax side, so the choice is between two bureaucracies duplicating function and one serving the function. The latter is clearly more efficient. There's going to be an income level beyond which, considering taxes which fund UBI, people get no net UBI payment; you don't need a cutoff in direct UBI benefits to acheive that.
At this point, we're down to conjecture. It will doubtless require higher taxes, which will quite possibly counter or outweigh any benefit of more money to spend. It's a big risk to take with the entire country.
> migration for benefits is a problem.
You don't have to have immigration controls, just establish residency requirements with a certain amount of time, holding down a job for however long, etc.
> Means testing is additional bureaucratic cost
Still doesn't make sense to send money to Jeff Bezos.
The cost to send Jeff Bezos $10k/yr is $10k/yr. The cost to NOT send Jeff Bezos $10k/yr might well be higher, because now you need to pay for a system to work out if you should be sending Jeff Bezoz $10k/yr or not.
Necessity: Any sane UBI system is revenue neutral. So anybody with above average income is going to pay more in increased taxes than they receive in benefits. That's easier and fairer than a claw-back.
https://medium.com/s/free-money/after-universal-basic-income...
Why would reducing disincentives to work, as compared to means-tested welfare, rationally be expected to have anything like that effect?
No. The main incentive to work is to have something meaningful to do with your time. Every experiment with UBI has shown that — given guaranteed support income — people are generally happier (or less stressed) and have a greater incentive to find work because the disincentive of reporting job-searching efforts is removed.
In addition, under a UBI everyone who has a paying job will have more disposable income than people who don't have a paying job. So while UBI will cover rent and food, if you want a nicer house or other trappings of luxury you'll need a paying job to find the extra money.
Nobody is going to be setting up a real estate empire or discovering the cure for cancer on UBI.
Another thing UBI will achieve is allowing people to move jobs without fear of being trapped in poverty. They won't settle for a low satisfaction, low pay job and will move to optimise their personal benefit.
Finally: UBI is not about "handing you everything you need." Universal Basic Income is there to provide for the basics: food & shelter. That's it. It's not supposed to replace an average wage, it's supposed to provide the minimum cost of living.
Not sure about this. Only short-term experiments have been conducted. Who knows what might happen if we have people who are raised on the idea that a living will come to them no matter what?
I think there's also an assumption that everyone loves what they do. Many of us do, so it's easy to think. However, the people who arguably need support the most often have the worst, least-likeable jobs.
> They won't settle for a low satisfaction, low pay job
Somebody has to do the work. Garbagemen will never be worth $15/hr. Many jobs that aren't will simply end up outsourced.
> Universal Basic Income is there to provide for the basics: food & shelter.
Then why would it be administered to everyone, on a national level, regardless of other factors? Food & shelter cost orders of magnitude more in San Francisco, California then in San Francisco, Texas. Why would it make since to give two hypothetical people, one living in each, the same amount of money to cover the "basics"?
Testing out UBI is predicated on the assumption most of those jobs "nobody wants" will be automated, and thus not available anyway.
With means-tested social benefits, that is not the case, and, in fact, you lose some (or in some particularly perverse, but unfortunately not all that uncommon cases when multiple means-tested programs are involved, more than all) of the additional money gained by adding work to reduced benefits.
That is the disincentive UBI removes (or, more accurately, reduces and/or pushes to a higher income level, because you run into it—though not the more perverse form unless marginal tax rates are above 100%—in the taxes to pay for benefits.)
Discourage bearing of children by pushing contraception and providing the poor and unemployed with free internet access, with streaming and online gaming, in order to occupy their time. Birthrates are already going down in the West, and probably a further push can be made here and there so that people are even less interested in children. Then, that underclass status won’t be passed on to another generation, it will stop with the first generation.
This kind of population control is rarely, if ever, a good idea. What happens if a racist decides to push stuff that targets blacks to try to shrink their numbers? You don't know that we won't get some awful person in charge of that.
Be really, really careful what you wish for and what you argue for.
UBI actually injects money into the economy. Accompanying UBI would be reducing minimum wage to zero, managing inflation by increasing income taxes in higher brackets, and removing deductibles so that more tax is collected. By reducing minimum wages you encourage people to start up new companies — with no salaries to pay, you reduce startup costs significantly (there are still costs such as insurance, legal filings).
The whole point of UBI is to pay everyone the same guaranteed amount. If you start scaling back as income rises, what you are actually doing is a different scheme called Negative Income Tax. UBI basically pushes any wages into the taxable brackets immediately.
A national government would institute a UBI to encourage a mobile workforce, since reducing the cost of switching towns reduces the friction of moving to find better work. A UBI also reduces the level of exploitation of workers, so there would be less workplace induced chronic injury which is a net drain on the country. There will also be improved mental health as people aren't forced to work in dead end jobs just to make ends meet.
For the USA specifically, UBI would need to be accompanied by reformation of the health care system, basically completing the implementation of the Affordable Care Act so that health insurance is actually affordable, and not bound to employment. The USA will also need to implement similar systems of regulation of the cost of health care services and products.
Not if it is tax funded (EDIT: But, even then, it doesn't pull money out of the economy); it may, however, increase the domestic velocity of money, which has a similar effect to injecting money.
> Accompanying UBI would be reducing minimum wage to zero
Maybe, maybe not. I think it would be more sensible to reduce minimum wage to it's non-UBI target minus (annual UBI/2000hrs); with a $8000 UBI (about right for poverty support given median household size) and a $15 non-UBI minimum wage target, that would be an $11 minimum wage (with the current $7.25 minimum wage as target, it would be a $3.25 minimum wage.)
> managing inflation by increasing income taxes in higher brackets,
Using fiscal policy to manage inflation is probably not a great idea; let the Fed do that with monetary policy, and if you raise taxes (whether by raising rates in higher brackets or by taxing capital gains the same as labor income or both), do it for revenue not inflation control.
Not unless you're printing it; that's the only way to "inject" money.
> Accompanying UBI would be reducing minimum wage to zero
This is not a "standard part" of all UBI proposals. Some agree; some don't.
> managing inflation by increasing income taxes in higher brackets
Any specific numbers on who would pay what? I may not be rich now, but I don't really like the idea of having to pay a bunch of taxes if I do become wealthy some day.
On the managing inflation part, giving more people more money to spend would make money move around more and quite possibly increase inflation. For an example, let's say I own an apartment building and currently rent a unit at $400/mo. If everyone starts getting $800+/mo, I know I can double my rates without anyone complaining too much. I might not do it all at once, but it seems almost inevitable that this will cause a significant amount of inflation by giving a large class of people more to spend.
> reformation of the health care system
That seems like a whole other kettle of fish. We do have one of the most innovative health care systems in the world, and I'd hate to see that stifled. I had some bad stuff I needed treatment for, which I'd rather not detail specifically. I talked to others in countries with government healthcare who had the same problem, and had to travel here to get treatment as it's a rare condition with most of the good treatments on the bleeding edge. A friend of a friend's mother was diagnosed with stage 2 breast cancer; told to come back later as it wasn't advanced enough to warrant operation.
As someone who's had to rely on treatment not deemed standard by the government, I get twitchy when people mention single-payer etc. Had I been stuck with the treatment prescribed by the gov't, I'd likely be dead.
Lastly, regulating health care prices removes incentives to develop really cool new treatments. They may cost more than your average kidney, but some of the knew cancer biologics are amazing. My parents have friends who have gotten amazing results, though they did have to use a significant chunk of their retirement for said results.
A lot of people kept saying it is very expensive but they did not factor in that UBI replaces all current social welfare programs we have with a single program. When you compare both, it is not that expensive.
For an example, Social Security alone is ~5% of current GDP and ~4% for Medicare. [1]
> Expressed as a share of GDP, program costs equaled 4.9 percent of GDP in 2017, and the Trustees project these costs will increase to 6.1 percent of GDP by 2038, decline to 5.9 percent of GDP by 2052, and thereafter rise slowly, reaching 6.1 percent by 2092.
> Social Security’s annual cost as a percentage of GDP is projected to increase from 4.9 percent in 2018 to about 6.1 percent by 2038, then decline to 5.9 percent by 2052 before generally rising to 6.1 percent of GDP by 2092. Under the intermediate assumptions, Medicare cost rises from 3.7 percent of GDP in 2018 to 5.6 percent of GDP by 2035 due mainly to the growth in the number of beneficiaries, and then increases further to 6.2 percent by 2092.
[1]:https://www.ssa.gov/OACT/TRSUM/index.html
That's just two walfare programs alone; there are others like SNAP, unemployment, etc.
This is the conservative argument for UBI - liquidate social security and distribute the proceeds; do more good with the same money because we don't have to pay means testing overhead; smaller, less intrusive government as a bonus.
The reality though is that every single social security program has been put in place as the result of a tough political fight. That politics isn't going to go away with the introduction of UBI. There will be demands to keep or reintroduce each and every social security program that currently exists. Funding can't realistically come from this source.
That's not a just action for the government to take. The original premise of social security was pay in money as you work, get it out when you're old. Though FDR started paying out immediately from the younger generation, so it started a generation in the hole. However, it was supposed to be basically forced federal savings, with some sort of safety net component as well. Not fair to tell those who paid in they'll never get anything out because someone wants it for policy goals.
No, the premise was always “pay taxes when working, receive benefits based on a formula driven by qualified earnings, with both pre- and post-retirement adjustment factors.” It has never been an investment vehicle with individual accounts, you aren't paying in and getting your money out with investment returns or matching or whatever.
(That said, because it's not a traditional means tested benefit but time-delayed inverse means tested one, it doesn't really make sense to replace it with UBI.)
My personal preference, very different from the above article, would be for a wealth tax that helps keep capital flowing, sort of like a company's dividend going back to investors. We the people are the investors in the wealthy's endeavors that led to that wealth. They keep the bulk, but they pay back some to all of us. If they don't make productive use of the wealth, something that benefits others, then their wealth slowly falls until they are like the rest of us.
By some measures of the wealth of the US, we have 100 trillion dollars in wealth and so 4% wealth tax would fund a 13k per person (including children) UBI.
My (perhaps naive) understanding is that rents tend to rise to a market equilibrium. Infuse the the aggregate market in an area with X dollars, and rents will rise to consume X.
I'd be curious to hear counterarguments to that point.
UBI (designed sanely) doesn't involve any net infusion of dollars (which would require government borrowing or printing money to distribute), it is paid for from tax revenues; it's a downstream redistribution, not an infusion.
Toy example: a population of 100, with one billionaire who owns their house outright and 99 people renting apartments. Take X dollars from the billionaire, distribute it to the 99. Why would the rentier, esp. if it happened to be the billionaire, not raise rents in aggregate by X?
If there is, in a market (of whatever scale, and whether it's housing rental or anything else), a monopoly or coordinated oligopoly that is abused so as to absorb all income growth, that's a problem calling for government intervention independent of UBI.
Maybe these exist in some housing markets, but if they do it's an orthogonal problem to UBI that is just as important to correct even if we don't adopt UBI. It's not, in any way, an argument against UBI.
They sort of do (at least in some cases; see San Francisco, New York, tons of other big cities).
> that is just as important to correct even if we don't adopt UBI. It's not, in any way, an argument against UBI.
The fact that the we need to address it doesn't mean we easily can. And doesn't mean that just blindly doing it is justified, just because there shouldn't be such a problem.
The mechanism for dealing with an essential service that, left to private industry with only normal consumer protection regulation, is difficult to prevent becoming a rent-extracting monopoly or oligopoly is well-established—you make the service a utility, either privately owned but publicly regulated for price and service requirements, or publicly owned. This isn't a deep mystery.
Now, most of the people that cry “housing is already oligopolistic and would extract rents defeating any UBI” as an excuse for opposing UBI evidently either don't actually believe that market condition really exists or want to preserve it in the absence of UBI even though it has the same impact on income gains without UBI as they complain it would with UBI, but the mechanism for addressing it is obvious and, if it really exists, essential even in the absence of UBI.
This is just a silly idea for housing. Power, water, etc. involves one set of infrastructure that runs across public and private land. It is very difficult to become a utility because of the insane investment required. Because almost no one can compete, it is regulated to prevent the otherwise-inevitable monopoly. Land is in no way the same; it's literally everywhere and many people own it.
Better solution? According to a professor of economics I talked to, it's to create tech hubs in other cities (at least for San Francisco; finance for NY, etc.).
Yes, that's the reason that they naturally tend to monopoly that is resistant to correction, but it is the fact that they tend that way, and not the reason for that tendency, that justified treatment as a utility.
> Land is in no way the same; it's literally everywhere and many people own it.
Are you arguing that residential rentals do not, in fact, either in general or in specific locales, tend to difficult to correct monopoly? If so, you aren't arguing against my point, which I'll remind you is merely that it doesn't matter if this is true in terms of UBI; if it is true, it is a problem of exactly the same dimension without UBI as with UBI, and thus irrelevant to the debate over UBI, and if it is false, then it's clearly irrelevant to anything.
> Better solution? According to a professor of economics I talked to, it's to create tech hubs in other cities (at least for San Francisco; finance for NY, etc.).
Well, not any kind of solution if you are an academic economist with no concern for pragmatics. Virtually every metro area of notsble size that isn't NY or SF had been trying to do that for a long time. Just choosing a policy result like that isn't a real-world solution, a real-world solution involved a policy action that can reasonably be expected to produce the desired result.
Also, either (1) local housing markets don't tend to monopoly, and this isn't needed, or (2) they do, and this just extends the time slightly before a successful firm in one market diversified into and also monopolizes other markets until you have the same problem nationally that you had in the local markets you tried to provide alternatives to. So, even if you had a mechanism to acheive what is sought as the solution, it wouldn't be a solution.
At present, most unemployment benefits systems require the recipient to stay where they are, or move to places with better employment opportunities. This places a large burden on the recipient since they might already be in a high rent area and are not allowed to move to somewhere they can afford to live.
It's also impractical to build public transportation that far out (you have to build increasingly more for each mile you expand from the nearest city center; distance between angles grows as you move outward), meaning that people would be driving a LOT more (higher gas prices). Or, if you by some miracle built all that transportation, it would be expensive. And people still need to "go to town" for many supplies, so just staying there isn't practical (let alone realistic for most).
https://worldaftercapital.gitbooks.io/worldaftercapital/cont...
Cost. $3.8 trillion by many estimates. That's nearly 20% of America's GDP. How is it possible to pull this much money out of the American economy without crashing it?
Scope. I am of the opinion that one of the beauties of federalism is that policies can be tested first at the state level before we commit our entire nation. Why would a national government do this?
Necessity. I don't think we need to be paying anyone who makes over 50k (maybe not the right number, but there should be a cutoff). That just takes money away from those who need it.
If a supporter of UBI can respond, I'd like to discuss possible concerns and benefits.