https://www.atlantafed.org/economic-mobility-and-resilience/...
A UBI, instead, eliminates these problems and ensures there's always a reason to increase your income. This in turn removes deadweight costs, improves economic efficiency, and can be expected to produce gains that will compound over time.
Yes, letting the poor starve to death might be more fiscally efficient, as long as they don't riot or anything. But most don't view this as a reasonable policy option.
At what point do they have "enough" income? At what point can we stop chasing more money? The USA already has a really high average income. Why do we need more?
You get a subsidized apartment that’s fixed too 30% of your income so long as you make under 150% the federal poverty level. In 21 that was $12,880 for an individual meaning they would pay $322/mo for rent. I’m virtually every area of the country an apartment at that rent is impossible to find. Should this person really make themself homeless to earn more money doing abullshit job?
This is a welfare cliff and they’re everywhere. Healthcare, insurance, transportation, housing, food, clothing, charity, etc.
Housing and meals have natural economies of scale. Even tasks like fetching medicine while you’re sick or waiting for package become easier.
It’s a travesty how many people these days think the standard course of action is to try to live as an island.
Well, parents aren't legally obligated to provide support past age 18, which means many don't. And youths that are wards of the state because of abuse or their parents becoming incarcerated, dying, etc, are not supported beyond age 18. So this is at least a frequent corner case we'll have to deal with, even if social norms change so that more parents support kids past 18.
If you require public assistance for housing and food, I think you don't have enough income.
But public benefits can phase out, leaving you in an awkward place where you have more income but less household resources and become unable to feed your family by virtue of making more.
Public assistance? Like UBI?
By using your definition, it is BETTER if we stop giving people money. I'm pretty sure that is not the intended direction
I think it's important that to whatever extent we decide that some people need assistance, that we do it in a way that doesn't have a cliff and preferably doesn't have any phase-out at all, for the reasons I described.
Yes, the assistance is still economically distortive, but less so than otherwise. Everyone still has an incentive to increase their income and economic output.
This idea came to me from none other than Milton Friedman, in the form of the negative income tax.
For instance, the income distribution of people within Beverly Hills is probably pretty OK - no need to redistribute anything there!
But if you zoom out, you can look at the entire world and realize that the poorest of the USA are richer than many people around the world and should pay their welfare
"realize that the poorest of the USA are richer than many people around the world and should pay their welfare"
Why should us taxes subsidize world welfare (not that it already doesn't)?
And, further, beyond the balance of transfers in absolute dollars-- $1000/mo in California impacts resident life less than $1000/mo in Wyoming.
I don't think this is a strong reason to not do UBI, but it's a confound.
Besides which, the median is a much better measure than average.
If UBI proponents ran on the platform of "eliminate all welfare and replace it with UBI" I would probably support them. But they don't, and they won't, because that's not politically tenable. I don't see a patronage angle where you can buy anyone's votes with that scheme, so it's never going to happen.
We already have the massive wrench in the form of benefits programs and EITC, etc. I say: restructure them to be UBI instead.
Milton Friedman advocated for a negative income tax which is much like a UBI, and most economists agree that giving out welfare in this means-tested way is extremely distortive. Maybe all these economists are "extremely credible": https://mitsloan.mit.edu/ideas-made-to-matter/negative-incom....
> If UBI proponents ran on the platform of "eliminate all welfare and replace it with UBI" I would probably support them.
I favor not quite this. I favor "eliminate most welfare and replace it with UBI". It will cost more, but it will also benefit a larger slice of people.
The proposals from the farthest left generally have UBI mutually exclusionary with receiving other benefits (from Yang et al.). So even there, we're talking about mostly eliminating other welfare.
In any case: refusing to discuss good ideas because we don't think they'll be politically tenable is a recipe for them to remain politically untenable forever.
> Every extant welfare scheme is a vote buying program which you're now nuking.
While some peoples' votes will be bought with welfare money, others will support it because they don't think it's OK to let the poor starve or don't want the poor to riot. E.g. me: I don't receive public assistance. I think welfare programs are necessary (though it's better if most of them are implemented in the form of a UBI).
If I were such a person, I would prefer UBI cash to welfare with strings.
Are you saying you'd prefer to receive benefits in-kind as e.g. housing assistance instead of cash?
Don't conflate "more economically efficient" with "gives recipients less".
Look, well-minding paternalistic peeps are behind the current system of "you can only buy some kinds of food with SNAP" and "you must spend this particular money with only certain providers of housing!" It's not the benefit recipient demanding that they be restricted in how they spend their benefits.
Less strings on the money is A) cheaper, and B) nicer for the recipient. I have no doubt that if you offered any poor person the choice between $600 in cash each month and $600 of section 8 credits, they'd take the former.
But, you know, you might deal with someone spending it all on crack (which is why we currently restrict the usage of funds). At least it'll be economically efficient, instead of them selling their SNAP card for crack for 50 cents on the dollar, like is the current outcome.
It takes entire agencies scores of hours to receive, verify, investigate and cure deficient applications, handle appeals, and execute wage garnishment orders due to their own overpayment/accounting errors -- not to mention approvals.
"Oh we just figured out you made too much money 5 months ago. Sorry bub, you gotta pay back The State the past 5mo of benefits, and re-apply" (with a 90 day waiting period... && Watch out kid, next time this happens it'll be a 180day wait.)
After that's done, they then turn around and do it all again every 6 months because they're forced to re-collect(and vet/process/cure) the same information again via a mandatory "beneficiary 6mo survey".
Sure-- not sure if you're agreeing with me or arguing? It is more costly to give aid with strings attached and complicated qualification requirements, and it is worth less to the recipients.
[Not to mention the costs that this bureaucracy imposes on the recipients. Time that they spend jumping through hoops in a bureaucracy is time and attention they can't spend on bettering their situation].
For example, a dollar spent on healthcare keeping a chronically sick person alive is a dollar that could instead have improved the welfare of all future generations.
Is there a version of this argument that doesn't throw grandpa under the bus?
There's a little bit of "spherical cow" involved though. A more detailed model would recognise that R&D spend is not pure investment, and UBI would not be pure consumption.
Whether non-zero UBI today would good policy or not depends on an enormous number of facts about the world that I think it would be very difficult to come to an agreement on.
For example, at what level diminishing returns from R&D spending kick in, and whether UBI apart from increasing immediate welfare has any compounding benefits (human capital, civil cohesion, education, business starts, citizen science) vs mostly benefiting landlords and netflix.
I expect our priors are quite different.
I think there is a pessimistic utilitarian argument for welfare just because people have concave/risk-averse utility functions (of wealth) and it's possible that the dollar-cheap utility gains for people close to zero might outweigh the higher-order costs, but it strikes me as somewhat fantastical to imagine that there might be meaningful financial gains from a welfare scheme, because people with more welfare money might use the money to read a book or start a successful business or something.
Think of it as a dividend on your citizenship.
Every person a shareholder of the nation.
If you set up a country with this idea from the start (a profit-seeking corporation with transferable shares), it might be a good idea, but probably no net beneficiaries of UBI would have shareholder status.
As the nation gets more productive, everyone's effective UBI goes up.
If the real value of the UBI gets to be too high and too many people stop working in balance with automated labor, then GDP starts to decline and people start getting worse off and increasingly incentivized to find some productive work to do.
Seems like it could end up being a self balancing system.
Common sense. Half of everyone and 95% of beneficiaries of UBI will use additional marginal cash to do things like smoke weed and watch cartoons. Being a beneficiary of UBI is already extremely compelling evidence of inability to efficiently allocate capital (personal or monetary).
> which could have a much higher return than the centrally-planned kind.
I guarantee that forcing me to ""invest"" my labor by giving it away to random people will have vastly lower returns (personal and social) than letting me invest it myself. My suggestion is not to increase taxes and give the money to R&D departments - my suggestion is to not take more of my money at all. The fact that R&D is better than UBI only tells us that if we were to increase central planning at the margins, UBI is almost certainly not the utilitarian way to do it.
> Being a beneficiary of UBI is already extremely compelling evidence of inability to efficiently allocate capital (personal or monetary).
The whole point of UBI is that it's universal and everyone is a beneficiary.
> I guarantee that forcing me to ""invest"" my labor by giving it away to random people will have vastly lower returns (personal and social) than letting me invest it myself.
The fact that organised societies have been much more successful historically than unstructured ones suggests you're wrong.
If I get a check for $1,000 every month and I lose $5,000 on taxes every month, I'm not really a beneficiary.
This is a wealth redistribution scheme. The wealth is being redistributed from people who are self-evidently efficient capital allocators to people who are self-evidently not. (That's a Bayesian judgement, not an absolute one.)
> The fact that organised societies have been much more successful historically
Please, I'd love to hear how "organized society" is synonymous with "welfare programs".
At first order it is, but at first order virtually any policy involves moving wealth around, and at first order any such thing is zero-sum.
> from people who are self-evidently efficient capital allocators to people who are self-evidently not.
Given that the biggest factor affecting income is parental class, that seems far from self-evident. More importantly, if we want to encourage the kind of higher risk tolerance that increases overall productivity on average, taking a chunk of upside to eliminate the downside makes sense. Putting $1m into a 50-50 chance that will produce $10m of value if it works out but leave you destitute if it doesn't is a positive for society, but irrational at an individual level; a tax system that leaves you with $5m if it works out and $50k if it doesn't aligns the incentives better. We already see that people who are lucky enough to have that kind of safety net by coincidence (e.g. rich families/friends) tend to be more entrepreneurial and willing to take the risks that do pay off than people who don't.
> Please, I'd love to hear how "organized society" is synonymous with "welfare programs".
I mean you can go right back to the Roman Empire and "bread and circuses". Organised society has always meant some level of support for those on the bottom.
This isn't actually true; it's one possible explanation that seems OK under cursory examination of the evidence, and it's compatible with American university social "science" dogma, but it falls apart under careful inspection. The overwhelmingly more likely (but incompatible with field political dogma) explanation is that income is most strongly mediated by intelligence, which is mostly genetically heritable. This is why people tend to have similar incomes to their parents. (This persists through adoption; try to explain that as a socially mediated effect.)
Now, that said, this has nothing to do with the fact that people who would most benefit from welfare schemes are the least likely to be efficient capital allocators. We can make the observation that they are not allocating efficiently independently from asking why they are not allocating efficiently.
> Putting $1m into a 50-50 chance that will produce $10m of value if it works out but leave you destitute if it doesn't is a positive for society, but irrational at an individual level
The market already efficiently addresses situations like this which actually exist, using schemes like business loans and outside investment. There is no way in hell some financial knob the government can blindly turn would do as good a job at performing this function as banks and investors who are actually making a conscious decision and putting their own money on the line. In other words, for every marginal good bet this scheme enables, it's going to enable 1000 marginal stupid bets.
> (e.g. rich families/friends) tend to be more entrepreneurial
You've made the same (understandable) inversion of causality as before. In reality, the latter tends to drive the former. Obviously the causality is bidirectional to some degree, but I think people tend to vastly underweight the primary direction.
I agree that society could do a better job enabling outsized performers without means to get access to capital, but we already do a pretty good job and there is no way that some simple welfare system would do a better job than the intentional systems we have now.
> Organised society has always meant some level of support for those on the bottom.
This may or may not be true (I'm not much of a historian), but I do know that "some level of support" doesn't mean "far-reaching government welfare infrastructure". It can mean churches, waqfs, and so on.
This can't explain the whole effect, because:
- The effect of parental income on later income remains even after controlling with standardized test scores.
- Further, parental income seems to increase child IQ a little bit, even after controlling for parental IQ scores.
(Formal, registered) adoption is virtually impossible for lower-class people, so studies have very little coverage of that.
> Now, that said, this has nothing to do with the fact that people who would most benefit from welfare schemes are the least likely to be efficient capital allocators. We can make the observation that they are not allocating efficiently independently from asking why they are not allocating efficiently.
But we can't even begin to talk about capital allocation if we're only looking at the output side and not the input side. The people who would benefit most from UBI would be mostly those who have seen little benefit from capital yes, but the overwhelming majority of those are people who never had much capital to allocate in the first place.
> The market already efficiently addresses situations like this which actually exist, using schemes like business loans and outside investment.
Access to those things is extremely class-gated.
> You've made the same (understandable) inversion of causality as before. In reality, the latter tends to drive the former. Obviously the causality is bidirectional to some degree, but I think people tend to vastly underweight the primary direction.
There are probably real effects in both directions, but there is certainly a significant difference from having a safety net. E.g. see the bump in people starting businesses once they hit the medicaid eligibility age threshold.
> There is no way in hell some financial knob the government can blindly turn would do as good a job at performing this function as banks and investors who are actually making a conscious decision and putting their own money on the line.
> I agree that society could do a better job enabling outsized performers without means to get access to capital, but we already do a pretty good job and there is no way that some simple welfare system would do a better job than the intentional systems we have now.
Maybe. Simplicity, transparency, and reliability can be a real gamechanger. At one point in the pandemic the government was trying to literally give away money to certain categories of small businesses but found it difficult, because the businesses that most needed the support were also those that were least efficient at navigating bureaucracies and processes. For an older example, Ramanujan won a scholarship to an elite school that was intended precisely to support cases like his (intelligent people from poor backgrounds), but lost it because, despite his mathematical brilliance, his grades in other subjects weren't high enough to meet the requirements.
> This may or may not be true (I'm not much of a historian), but I do know that "some level of support" doesn't mean "far-reaching government welfare infrastructure". It can mean churches, waqfs, and so on.
Sure. But that style of non-guaranteed social support increases the pressure on poor people to live in a conventional, legible fashion, avoid downside risks, and conform. We gain little and lose much from encouraging the poor to be (literally and metaphorically) sober and miserable because it would be not costly but merely unseemly to enjoy themselves (especially - though far from only - when that enjoyable thing is potentially productive, but in a way that's not necessarily understandable to those in charge of that welfare infrastructure).