The thing I don't really see accounted for in these experiments is that UBI is not really "universal". It's a group, or a town who or are not isolated from the outside economy, and the participants are usually aware/suspect that this bonus income probably won't last forever, so they know they need to keep working to maintain their careers etc.
I'm not sure there's any way to account for it unfortunately, it is such a compelling idea though I think we kind of all want it to be real.
Isn't this going to happen to a real UBI anyway? The grand idea behind a UBI is in its simplicity. Everyone gets it no exclusion but nobody thinks about the fact that a non distorted UBI is impossible to implement. There are going to be "concessions".
It reminds me of the EU CO2 cap and trade system. In theory it would be a highly effective tool. In practice lots of sectors are excluded, a lot of free CO2 certificates are given away and many to the biggest polluters because they may become uneconomical, which is the entire point of the system in the first place. Basically, the system gets distorted so that the status quo remains. This doesn't mean that the system is not doing something but my point is that you'll have to tone down your expectations.
If we ever see a widespread UBI it will probably be means tested and with a limited duration which is exactly what this experiment is doing. It will probably be more effective and less costly but it won't bring wonders. It'll just be an incremental update to the conventional welfare system many countries have.
I maintain that I would like to see UBE -- Universal Basic Employment.
If you can work, we have a job for you.
Part-time, full-time, your choice. We'll even train you up.
Especially in the US -- there is tons of work to be done on infrastructure, plenty of research to be sponsored with results placed in the public domain, etc.
We derive a large chunk of our personal value, out of what we contribute to our tribes -- our community, our friends, our company, etc. If somebody is willing to contribute to society, we should encourage and enable that.
Your first paragraph is exactly how I would word a defense of a UBI trial that had a bad outcome. Let’s talk about the good things that happened and were measured instead of speculating about the hypothetical bad things that are out of scope for this trial. A successful small trial will lead to larger future trials that might answer your question in a more satisfying way.
It's not a UBI study if it only studies whether people like getting money they don't have to do anything for.
I'm repeating it every time: these kinds of studies are the same as measuring the output of "free energy machines" that supposedly work by breaking physics... while ignoring that they are plugged into a wall-socket. To prove that they work, you'd have to unplug them, otherwise you don't need the sophisticated machine and the fancy theory, an extension cord will do the same much cheaper and more efficiently.
>the participants are usually aware/suspect that this bonus income probably won't last forever
If a country fully implemented permanent UBI today, all of this would still be true. Controversial political decisions are likely to face constant challenge, and this especially applies to those decision which do not benefit the most powerful.
Being critical of this as an imperfect experiment is an odd take to me. This is what reality looks like. Having a real-world test like this is an important stage of the process of implementing UBI.
Not to mention the US government recently sent $1,200 to a huge swath of the country and Alaska has had a similarly sized UBI-like fund for years. If we want we can chop it up and give it to ourselves each month and call it a $100 UBI (somewhat means tested). Alongside smaller, more direct comparisons like this study, I think we already have a fairly good sense of what a small to moderate UBI would look like.
Nothing would go crazy. People would have more money. They’d work the same amount except select groups (students, disabled, elderly) and be slightly/moderately happier at least in the short term. We’d either have higher deficits or taxes, probably both.
It is quite complex subject, but defiantly needs faster progressing and bigger trials.
With AI advances on the way destructing jobs, it is our role to reinvent and find our own place in the future society, question who has rights to have resources, should we invent meaningless jobs, should we accept economical model and maximizing our output, or maybe Scandinavian model where we place people in the center and try to maximize creative potential, well being and happiness?
The Scandinavian model is often cited by people in US as an argument for anything they want to support, but it is never understood; it become a buzzword.
For example people almost never mention the ethnic homogeneity (and the big problems when that does not happen, see Malmo), that free selection of jobs makes gender split even more unequal than expected or the chronic alcoholism in most of Norway. Cherry picking some parts and ignoring the big picture is a fail.
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.
> 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.
> 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.
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.
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?
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.
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.
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...
> 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.
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.
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.
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.
>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.
> 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.
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.
1) I think UBI would probably be a very good thing.
2) I can’t help but laugh at how comical these tests are at measuring the impacts of a UBI policy. 2yr temporary welfare payments of 6,720 Euro a year to a tiny, biased subset of the populace is NOT going to give us an idea of the impacts of a UBI policy. Please, someone, at least agree to the payments in perpetuity.
They are equivalent under certain assumptions, but there are still differences (assuming negative income tax would operationally work in the same manner as current tax systems), e.g.:
1) UBI is targeted to citizens, while income tax affect tax residents, these may be different groups of people.
2) tax refund is paid once a year, which would be problematic for people with bad money management abilities.
Ok, then let's go with a negative income tax instead. Other than avoiding welfare traps there is not much merit to the idea of a UBI anyway. People have always worked, the only ones that really need a UBI are those that cannot do work or are in the process of seeking better work but are trapped in their existing one. A negative income tax serves them just as well but people won't associate it with "free money for everyone".
I know a friend who would love to work as a software developer but can't afford even the relatively small tuition that a German university charges its students with his current job. A negative income tax would help him out.
I don't understand. What under UBI is preventing me from quitting my job and spending the rest of my life playing videogames? I know it's unpopular opinion on HN, but most people don't really learn and explore in their free time, and they don't have high requirements from life. A place to stay, food and electricity is all they need for the most part.
Nothing really. However, to get that really good TV screen, impress would be partners or just make yourself more content, you might want to get a good job.
Even if some people opt to just do nothing and get money for that, it's no big deal. I'd much rather see people spend time with their kids and get UBI than them having to work bullshit jobs that benefit no one (telemarketer or whatever).
Well, you have a natural experiment on this. People in western europe have a solid welfare net, with programs allowing them to effectively have cycles of work/welfare. Eastern Europe doesn't. Work market is open and free.
What is happening? You have lots of work migration from Romania to UK where both parties are very happy: employers would much rather hire people that are there to work and make money, as opposed to people that are just clocking their 12 months. And employees are happy to work hard and make a lot of money.
I'm not venturing to comment on what conclusions should be drawn from this, but I do caution against knee-jerk ones. On one hand the system seems to have self-balanced nicely. On another, it's basically taking advantage on the east-west difference, and that has an obvious time limit.
What I quite like about the UBI is that it would raise the bar for bullshit jobs- currently they’re low paid because they are not valuable to society but enough desperate people need the money to persevere with this. I think UBI would make business owners think twice about making the workers do some stupid, pointless tasks or if they insist they would have to pay handsomely for it.
Personally I don’t mind doing some tedious work as long as I’m being paid fairly for it and I’d still do it on top of UBI.
Have you, for the past several years, earned much more than minimum salary (and UBI would presumably be less than that)?
If so, what has prevented you from saving all the excess money beyond minimum salary and retiring (or taking several years off), living on minimum expenses while playing videogames?
Actually that is my current strategy. I make twice the average salary for my country and my monthly spending is around the minimum salary. Everything excess is going on a savings account, which currently has the equivalent of 100 average salaries. I plan to retire early or take few years off.
The main thing preventing that for a good part of the population is that it's quite difficult to earn enough for it to last for the rest of your life. Conservatively you need about 30-40x your yearly spending in the bank to never have to work again. Say you need about 15000€ a year for rent, food, entertainment and other expenses. You'd have to save at least half a million euros to afford that indefinitely. Most people never manage to earn that much excess income and those who do are likely in a demographic that enjoys what they do and would continue working.
>If so, what has prevented you from saving all the excess money beyond minimum salary and retiring
I don't see what this has to do with UBI, other than maybe you're trying to counter the presented hypothetical by asking if the parent poster would actually be happy to live frugally.
Not only are there plenty of people with professional success that save aggressively or have other goals (e.g. skiiers that makes six figures and still live like skibums), but they're a different category than people that would be willing to coast by minimally if given the opportunity.
By that logic nobody would want to get raises or work full time. Everyone would try to find a part time job that barely covers their expenses and then spend the rest of their time playing video games.
Yep, it's true for alcoholics, drug users, and gameaholics. I knew one gameaholic, which lived in hostel, and worked only when necessary. Most of the time, he played a game on his notebook.
It's surprisingly hard to find stable long term part time jobs paying more than the hourly min wage (which isn't enough to afford rent+food in most places)
> What under UBI is preventing me from quitting my job and spending the rest of my life playing videogames?
Nothing, except that UBI is a basic income, so you don't have the money for the latest and greatest gaming PC. You have enough money to not go homeless, but not a whole lot more. If you want that PC, you have to still work for it.
If you look around, most people aren't exactly living the most basic life possible with the least work possible, they quite like their luxury goods in exchange for work.
That depends on what is the definition of basic. I assume food, electricity, water and a place to live would be covered under UBI, I think there's no arguing about that. But anything else? I can easily imagine calls for extension for things like entertainment. Should internet access be considered basic? How about TV or a game console? Mobile phone? I'd say these shouldn't fall under "basic" needs, but that might change.
Not everyone has the latest and greatest gaming PC; I know people that can afford it, but they play games that are 2-5 years old they can buy discounted ($20 instead of launch price of $60) and the average computer of the day can play with max settings. Living on UBI does not make people stupid, just lower budgeted and even encourages making some better decisions - having more sense than money.
As someone who has tried that, eventual depression. Sitting around doing nothing is awesome until it isn't
I took a over a year off from working two years ago, and it probably took less than 6 months for depression to begin setting in. By a year I recognized how awful and lethargic I felt, and when I started working again a few months later I was ecstatic to get out of bed at 6:30am to actually go do something every day. In the past this is something I would've loathed, but it was so much better than sitting around all day playing games.
I can't speak for others, but I know personally I need "work" to be happy. I don't think it has to be a job at an office, but something to make me feel like I'm contributing and striving towards something useful & bigger than myself.
There's definitely a magic number there for people who are used to being productive/creative at work. Finding the proper length for a hiatus where you feel refreshed and ready to work again without the burnout, but not so long that you become depressed/lazy/restless is tough. Especially so if it takes a while to find the next job after said hiatus the restlessness and depression can set despite the planning.
Absolutely nothing would be stopping you from living solely on UBI. You would have very basic accommodation, very basic food, and very little left over for entertainment and leisure.
I'm sure some people would be perfectly content living like that, but the vast majority want more. They want a nicer house/apartment, they want nicer food and snacks, and they want to travel, go to restaurants, go see movies, have parties, and so on.
Because most people generally want more than just the bare minimum basics, they are motivated to work for that extra comfort and ability to do things.
UBI simply provides a safety net for how far towards rock bottom you can fall.
> most people don't really learn and explore in their free time, and they don't have high requirements from life
Most people want luxuries associated with middle-class lifestyle, that is pretty clear. Reasonable UBI would be less than 1/4 of median wage, but there are not many people with median wage switching to quarter-time jobs and living ultra-frugal life while spending rest of their time playing videogames.
What kind of percentage of people that have jobs today do you think are really productive in society and benefiting it? I think having a job does not mean you are benefiting society. You can be a telemarketer, a manager in a pesticide factory or developing new ad tracking technology. In my opinion, it'd be much better for those people to stay at home with their kids and get UBI.
And like I said in my other comment, there are a bunch of incentives. People usually want to have more money to save up, buy more stuff, feel more secure, etc. so people would work to have more money than the basic income. Apart from that, people want jobs to have a higher status among their peers and some people genuinely like what they do.
If UBI was introduced, would you personally sit around all day or would you continue working? If you'd continue working, what makes you think you're the only one?
UBI isn't enough money to live on for free. It's about half that.
12k is enough money to live but your standard of living is worse enough to be visibly felt.
If you look at https://www.gapminder.org/dollar-street/, 12k / yr generally the level where most essentials are visible around the world. But you're likely not going to have:
1) A car
2) A house
3) Feed a family
4) Savings
5) An expensive hobby
You'd need about another 5-10k on the UBI check to really make this argument for UBI... which you get through working.
it's all about education and sozialisation. people want to be recognized for their achievements. they don't want to be recognized as a couch potato. if what you say were true, then why would anyone work more than what they need to cover their expenses now?
yes, people say they don't want to work. but what they really mean is that they don't want to work bad jobs just because they have to.
why do people do volunteer work? again, what incentive to do volunteers work do people have now? lots of work without much reward. yet people still do it. UBI won't change that, but it will give more people the opportunity to do volunteer work, or do more of it.
many jobs today are not actually producutive for society. people do them because they pay. and they will continue doing them because UBI won't enable you to have expensive vacations or other luxuries that you might enjoy.
on the other hand, people stuck in bad jobs may be enabled to quit them, because it won't cost them their home or their insurance. pay will rise because people don't need to accept hard labor for minimum wage anymore.
"If people are given enough money to live on for free I would wager there is zero incentive for them to be productive within society. Zero."
Take any country with wide social safety nets. You don't really need to work in them to live.
At least in my country most people prefer working. There is a small subculture of some families that seem to pass on unemployment as a way of life to their children but those are really ,really few.
My answer is - I don't know the general answer. In my culture people prefer working to not working, even though they don't have to. But I don't know if this applies universally.
There is less incentive for people to survive financially by doing unethical work on behalf of powerful and wealthy people, OK, we can agree on that.
But, is (for example) cooking and cleaning and caring for others 'productive'? We don't see that in macroeconomic figures, so it doesn't count - but most people do a huge amount of that without being motivated by pay.
My understanding of the world is that most people are even more motivated to do things for others that don't bring a financial reward.
What difference is it to you how someone chooses to live their life? I don't understand how this is an argument for anything except to prove your own intolerance.
Doesn't that article that you're commenting on address this?
The study found that the people on the UBI payments we're more likely to be employed than the reference group - Its clearly wildly incorrect to say that there's zero incentive to find work
because many would quickly find themselves not satisfied with having less than they see others with and there would be more than enough politicians lining up to tell you how unfair it is to you furthering your discontent.
UBI at levels needed to sustain your existence would not necessarily mean living alone how you choose to live but pretty much may end up in group homes or similar accommodations where many facilities are shared to make it affordable. Even then some areas of the world or even city will be inaccessible to many.
If you want to and put some effort into it you can already get a "basic income" in my country. It's €1000 per month or so and at that level you also get other support on top. Plenty to have a 'basic' life.
There's always some that are "fine" with it and don't try or intentionally screw up the mandatory search for work. But in general everything you said simply doesn't happen.
People DO have an intrinsic need for exploring, learning and feeling useful.
> What under UBI is preventing me from quitting my job and spending the rest of my life playing videogames?
You wouldn't quit your job. You would continue working. Like most people would. Why? Because if you didn't work, someone else would, and they would get way ahead of you. From my point of view, UBI would do nothing but cause inflation (at least for now anyway, story will change once lots of people have no skills that are needed in the job market).
People keep saying "inflation" with no theory for how that could happen without creating any additional money.
Alice pays $8000 in taxes and receives a $12,000 UBI. Bob pays $12,000 in taxes and receives a $12,000 UBI. Charlie pays $16,000 in taxes and receives a $12,000 UBI. $4000 is transferred from Charlie to Alice. Alice buys $4000 more stuff, Charlie buys $4000 less stuff. Where is the inflation supposed to come from?
Even if that is all it achieves, inflation is much better than recession or stagnation.
It forces people to think of new ways to run business to stay ahead.
That already does happen in some countries with the state financial aids to people. They just quit working and do whatever they want meanwhile the working people fund their lives with taxes.
That is a bad example. Some people do indeed choose that way to live and there will be always people like that, but the overwhelming majority wants to hold a job.
Social security will probably regress to a pretty low mean with open borders though. Within the EU are already problems with different levels of support.
That is true. The question is - can an economy sustain itself if most people do that? People living on aid are financed by working people, but that only works if most people are working. Similar to the retirement systems in which young people pay for old people's retirement money, which is under threat in developed countries because there are much fewer kids than in the past.
The total spent on all welfare programs is about 1T. If all adults got UBI, assume around 256 million people above 18
1) 256 million @ 12K each is 3T, the current budget is 4.7T, current revenue is 3.5T. Good luck raising taxes by almost double. It will never happen. So UBI will need to be means tested. Ideally it would slowly phase out so there is no disincentive to work.
2) how do you handle UBI for large families? Does each child get UBI? If so I promise you people will have more children to get more UBI. If people dont get more UBI per child, people will have too many children, UBI wont be enough and children will go hungry. Which is why we give food instead of cash
3) How will you handle people selling their UBI income stream for a lump sum, blowing it all, then starving anyway?
4) 10% of the population is pretty much incompetent either in IQ or in emotional intelligence. That would be 30 million that simply wont be able to handle being given money.
> 1) 256 million @ 12K each is 3T, the current budget is 4.7T, current revenue is 3.5T.
Always seems to be that 12K is too big for first iteration. 3T is about 15 % of US GDP. When i computed UBI for my home country (not US) with the same level as existing (means tested) minimum income social welfare benefit, i got that it would need 8 % of GDP.
> Good luck raising taxes by almost double
I also found that about 1/3 of necessary money could be get by removing basic per capita tax deduction. Which is technically tax increase, but it is neutral if one counts UBI as negative tax money.
Another more than 1/3 could be get from state pensions by relabeling part of pension income as UBI. Some small part could be get from removing the minimum income social welfare benefit (but not other social welfare). Altogether that would cover more than 80% of necessary money and one would only need additional taxing of 1-2% of GDP (compared to existing 35%).
3) How will you handle people selling their UBI income stream for a lump sum, blowing it all, then starving anyway?
Personal bankrupcy laws?
4) That would be 30 million that simply wont be able to handle being given money.
If they had not be able to handle UBI money, then they would not be albe to handle wage money or existing means tested welfare money as well.
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I'm not sure there's any way to account for it unfortunately, it is such a compelling idea though I think we kind of all want it to be real.
It reminds me of the EU CO2 cap and trade system. In theory it would be a highly effective tool. In practice lots of sectors are excluded, a lot of free CO2 certificates are given away and many to the biggest polluters because they may become uneconomical, which is the entire point of the system in the first place. Basically, the system gets distorted so that the status quo remains. This doesn't mean that the system is not doing something but my point is that you'll have to tone down your expectations.
If we ever see a widespread UBI it will probably be means tested and with a limited duration which is exactly what this experiment is doing. It will probably be more effective and less costly but it won't bring wonders. It'll just be an incremental update to the conventional welfare system many countries have.
If you can work, we have a job for you.
Part-time, full-time, your choice. We'll even train you up.
Especially in the US -- there is tons of work to be done on infrastructure, plenty of research to be sponsored with results placed in the public domain, etc.
We derive a large chunk of our personal value, out of what we contribute to our tribes -- our community, our friends, our company, etc. If somebody is willing to contribute to society, we should encourage and enable that.
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I'm repeating it every time: these kinds of studies are the same as measuring the output of "free energy machines" that supposedly work by breaking physics... while ignoring that they are plugged into a wall-socket. To prove that they work, you'd have to unplug them, otherwise you don't need the sophisticated machine and the fancy theory, an extension cord will do the same much cheaper and more efficiently.
If a country fully implemented permanent UBI today, all of this would still be true. Controversial political decisions are likely to face constant challenge, and this especially applies to those decision which do not benefit the most powerful.
Being critical of this as an imperfect experiment is an odd take to me. This is what reality looks like. Having a real-world test like this is an important stage of the process of implementing UBI.
Nothing would go crazy. People would have more money. They’d work the same amount except select groups (students, disabled, elderly) and be slightly/moderately happier at least in the short term. We’d either have higher deficits or taxes, probably both.
For example people almost never mention the ethnic homogeneity (and the big problems when that does not happen, see Malmo), that free selection of jobs makes gender split even more unequal than expected or the chronic alcoholism in most of Norway. Cherry picking some parts and ignoring the big picture is a fail.
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)?
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.
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.
How is that fair to working people with ambitions?
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.
Where would we get it from? Are there any extensive papers explaining it? I'm super curious.
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...
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?
Actually, it is exactly like UBI, under NIT you also get money if you don't have a job.
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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.
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.
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.
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.
https://www.scottsantens.com/negative-income-tax-nit-and-unc...
2) I can’t help but laugh at how comical these tests are at measuring the impacts of a UBI policy. 2yr temporary welfare payments of 6,720 Euro a year to a tiny, biased subset of the populace is NOT going to give us an idea of the impacts of a UBI policy. Please, someone, at least agree to the payments in perpetuity.
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For example, a UBI of $1000 and 25% tax is the same as a (possibly negative) income tax of 25% above $4000. That's because:
You can convert from one to the other.1) UBI is targeted to citizens, while income tax affect tax residents, these may be different groups of people.
2) tax refund is paid once a year, which would be problematic for people with bad money management abilities.
I know a friend who would love to work as a software developer but can't afford even the relatively small tuition that a German university charges its students with his current job. A negative income tax would help him out.
Even if some people opt to just do nothing and get money for that, it's no big deal. I'd much rather see people spend time with their kids and get UBI than them having to work bullshit jobs that benefit no one (telemarketer or whatever).
What is happening? You have lots of work migration from Romania to UK where both parties are very happy: employers would much rather hire people that are there to work and make money, as opposed to people that are just clocking their 12 months. And employees are happy to work hard and make a lot of money.
I'm not venturing to comment on what conclusions should be drawn from this, but I do caution against knee-jerk ones. On one hand the system seems to have self-balanced nicely. On another, it's basically taking advantage on the east-west difference, and that has an obvious time limit.
If so, what has prevented you from saving all the excess money beyond minimum salary and retiring (or taking several years off), living on minimum expenses while playing videogames?
I don't see what this has to do with UBI, other than maybe you're trying to counter the presented hypothetical by asking if the parent poster would actually be happy to live frugally.
Not only are there plenty of people with professional success that save aggressively or have other goals (e.g. skiiers that makes six figures and still live like skibums), but they're a different category than people that would be willing to coast by minimally if given the opportunity.
But the labor market doesn't work like that.
Nothing, except that UBI is a basic income, so you don't have the money for the latest and greatest gaming PC. You have enough money to not go homeless, but not a whole lot more. If you want that PC, you have to still work for it.
If you look around, most people aren't exactly living the most basic life possible with the least work possible, they quite like their luxury goods in exchange for work.
I took a over a year off from working two years ago, and it probably took less than 6 months for depression to begin setting in. By a year I recognized how awful and lethargic I felt, and when I started working again a few months later I was ecstatic to get out of bed at 6:30am to actually go do something every day. In the past this is something I would've loathed, but it was so much better than sitting around all day playing games.
I can't speak for others, but I know personally I need "work" to be happy. I don't think it has to be a job at an office, but something to make me feel like I'm contributing and striving towards something useful & bigger than myself.
I'm sure some people would be perfectly content living like that, but the vast majority want more. They want a nicer house/apartment, they want nicer food and snacks, and they want to travel, go to restaurants, go see movies, have parties, and so on.
Because most people generally want more than just the bare minimum basics, they are motivated to work for that extra comfort and ability to do things.
UBI simply provides a safety net for how far towards rock bottom you can fall.
Most people want luxuries associated with middle-class lifestyle, that is pretty clear. Reasonable UBI would be less than 1/4 of median wage, but there are not many people with median wage switching to quarter-time jobs and living ultra-frugal life while spending rest of their time playing videogames.
I think after a while I'd start my own projects
This is the only argument I present to people that talk to me about UBI in a positive way, ie they want UBI.
If people are given enough money to live on for free I would wager there is zero incentive for them to be productive within society. Zero.
Change my mind!
And like I said in my other comment, there are a bunch of incentives. People usually want to have more money to save up, buy more stuff, feel more secure, etc. so people would work to have more money than the basic income. Apart from that, people want jobs to have a higher status among their peers and some people genuinely like what they do.
If UBI was introduced, would you personally sit around all day or would you continue working? If you'd continue working, what makes you think you're the only one?
12k is enough money to live but your standard of living is worse enough to be visibly felt.
If you look at https://www.gapminder.org/dollar-street/, 12k / yr generally the level where most essentials are visible around the world. But you're likely not going to have:
1) A car
2) A house
3) Feed a family
4) Savings
5) An expensive hobby
You'd need about another 5-10k on the UBI check to really make this argument for UBI... which you get through working.
yes, people say they don't want to work. but what they really mean is that they don't want to work bad jobs just because they have to.
why do people do volunteer work? again, what incentive to do volunteers work do people have now? lots of work without much reward. yet people still do it. UBI won't change that, but it will give more people the opportunity to do volunteer work, or do more of it.
many jobs today are not actually producutive for society. people do them because they pay. and they will continue doing them because UBI won't enable you to have expensive vacations or other luxuries that you might enjoy.
on the other hand, people stuck in bad jobs may be enabled to quit them, because it won't cost them their home or their insurance. pay will rise because people don't need to accept hard labor for minimum wage anymore.
Take any country with wide social safety nets. You don't really need to work in them to live.
At least in my country most people prefer working. There is a small subculture of some families that seem to pass on unemployment as a way of life to their children but those are really ,really few.
My answer is - I don't know the general answer. In my culture people prefer working to not working, even though they don't have to. But I don't know if this applies universally.
There is less incentive for people to survive financially by doing unethical work on behalf of powerful and wealthy people, OK, we can agree on that.
But, is (for example) cooking and cleaning and caring for others 'productive'? We don't see that in macroeconomic figures, so it doesn't count - but most people do a huge amount of that without being motivated by pay.
My understanding of the world is that most people are even more motivated to do things for others that don't bring a financial reward.
The study found that the people on the UBI payments we're more likely to be employed than the reference group - Its clearly wildly incorrect to say that there's zero incentive to find work
UBI at levels needed to sustain your existence would not necessarily mean living alone how you choose to live but pretty much may end up in group homes or similar accommodations where many facilities are shared to make it affordable. Even then some areas of the world or even city will be inaccessible to many.
There's always some that are "fine" with it and don't try or intentionally screw up the mandatory search for work. But in general everything you said simply doesn't happen.
People DO have an intrinsic need for exploring, learning and feeling useful.
You wouldn't quit your job. You would continue working. Like most people would. Why? Because if you didn't work, someone else would, and they would get way ahead of you. From my point of view, UBI would do nothing but cause inflation (at least for now anyway, story will change once lots of people have no skills that are needed in the job market).
Alice pays $8000 in taxes and receives a $12,000 UBI. Bob pays $12,000 in taxes and receives a $12,000 UBI. Charlie pays $16,000 in taxes and receives a $12,000 UBI. $4000 is transferred from Charlie to Alice. Alice buys $4000 more stuff, Charlie buys $4000 less stuff. Where is the inflation supposed to come from?
Social security will probably regress to a pretty low mean with open borders though. Within the EU are already problems with different levels of support.
Reading the comments I see no new arguments. It feels like Groundhog Day.
https://www.helsinki.fi/en/news/nordic-welfare-news/heikki-h...
https://www.businessinsider.com/finland-basic-income-experim...
https://www.theguardian.com/world/2019/feb/08/finland-free-c...
https://www.jacobinmag.com/2019/12/basic-income-finland-expe...
https://www.bloomberg.com/news/articles/2019-02-08/finland-f...
https://www.independent.co.uk/news/world/europe/finland-univ...
1) 256 million @ 12K each is 3T, the current budget is 4.7T, current revenue is 3.5T. Good luck raising taxes by almost double. It will never happen. So UBI will need to be means tested. Ideally it would slowly phase out so there is no disincentive to work.
2) how do you handle UBI for large families? Does each child get UBI? If so I promise you people will have more children to get more UBI. If people dont get more UBI per child, people will have too many children, UBI wont be enough and children will go hungry. Which is why we give food instead of cash
3) How will you handle people selling their UBI income stream for a lump sum, blowing it all, then starving anyway?
4) 10% of the population is pretty much incompetent either in IQ or in emotional intelligence. That would be 30 million that simply wont be able to handle being given money.
Always seems to be that 12K is too big for first iteration. 3T is about 15 % of US GDP. When i computed UBI for my home country (not US) with the same level as existing (means tested) minimum income social welfare benefit, i got that it would need 8 % of GDP.
> Good luck raising taxes by almost double
I also found that about 1/3 of necessary money could be get by removing basic per capita tax deduction. Which is technically tax increase, but it is neutral if one counts UBI as negative tax money.
Another more than 1/3 could be get from state pensions by relabeling part of pension income as UBI. Some small part could be get from removing the minimum income social welfare benefit (but not other social welfare). Altogether that would cover more than 80% of necessary money and one would only need additional taxing of 1-2% of GDP (compared to existing 35%).
3) How will you handle people selling their UBI income stream for a lump sum, blowing it all, then starving anyway?
Personal bankrupcy laws?
4) That would be 30 million that simply wont be able to handle being given money.
If they had not be able to handle UBI money, then they would not be albe to handle wage money or existing means tested welfare money as well.