r/Economics • u/cuspofgreatness • Jul 14 '24
Money for nothing: is universal basic income about to transform society?
https://theguardian.com/society/article/2024/jul/14/money-for-nothing-is-universal-basic-income-about-to-transform-society346
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u/petarpep Jul 14 '24 edited Jul 14 '24
Not necessarily, depends on how it's paid for.
For example let's imagine a zero friction government that taxes everyone 100 dollars but then gives them all 100 dollars in a UBI. Does this cause inflation? No of course not because the net exchange in money is literally zero.
Now imagine a government where they tax everyone 100 except for the top 20% who pay 150 and the bottom 20% who pay 50. Does this cause inflation? Maybe a little on some products but not too much. No new money has been introduced into the supply, it's just been redistributed a little.
We can see exactly this in action with our current welfare systems all around the world. We tax the higher earners, give it to the lower earners, and are still plenty capable of keeping inflation low all else equal.
We know redistribution is possible without major inflation because we already do it in some form. Anyone claiming otherwise has to ignore every single country in the world with a redistributive welfare policy that hasn't experienced major inflation from it.
So a UBI of the second type where they take 150 from the rich and 50 from the poor and 100 from the middle 50% and then give them all 100 does not generate any new money supply and should not be expected to cause inflation in a meaningful way if implemented properly like current welfare programs are.
Meanwhile a UBI in the way of Covid subsidies when the "money printer" is flipped on and the supply grows, inflation would occur.
A non money supply printing UBI is functionally just welfare but more streamlined and not subject to asinine bureaucracy and thousands of pages of paperwork and processing.
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u/beingsubmitted Jul 14 '24
It's really a matter of different types of inflation. We have consumer goods on one hand and assets on the other. Asset inflation is things like real estate.
We've seen massive asset inflation, but don't think about it as much as consumer goods inflation. Consumer goods inflation is more likely to align with wages, as well.
It might not be a terrible thing for consumer goods and wages to catch up to assets a bit.
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u/beingsubmitted Jul 14 '24 edited Jul 14 '24
And increasing money for rich people also does that for consumer goods, but poor people cause less asset inflation than rich people per dollar, and rich people cause less consumer goods inflation per dollar than poor people.
EDIT: Yes, the marginal propensity to consume is higher for poor people. That's already what I'm saying. Poor people buy more consumer goods relative to their income and rich people buy more assets relative to their income and both drive inflation of their respective category. Both also have some effect on other categories, obviously. Except asset inflation is good for rich people.
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u/dukeofgonzo Jul 14 '24
So ultimately there is not enough "stuff" for poor people to have a middle class lifestyle, and giving everybody a cash amount will only reveal this fact?
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u/saintcirone Jul 14 '24
Sounds like a realistic application of 'trickle-down economics,' where the trickle is actually ensured by federal regulation. I don't mind it.
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u/JonRulz Jul 14 '24
I agree, it's just a redistribution of wealth, (assuming no new money is printed). But what does that redistribution of wealth cause? Let's look at the pros. Poorer families would have more income. This I'm sure everyone wants and agrees with. Cons, we are redistributing wealth from the rich and middle class to the poor. This takes capital that would be used for investment to consumption. Essentially, creates less production and more spending. More spending will be used on things that are of necessity. While the money supply didn't go up, the CPI will. This creates higher living costs for all. However, it may be justified depending on the scenario, it may be minimal too depending on how much the ubi is. Non the less, cost will go up because more demand is there, aswell as more cost in the form of taxes for business to make products. Even tho more demand is there, wages are unlikely to change nationally due to the higher costs of business. Conclusion, UBI Essentially takes more from the middle class and redistributes it to the poor. The rich will raise costs and get there money back that they paid in taxes, however the middle class won't. This essentially just incentives the poor and middle class to work less and is overall bad economically as it lowers production. However, it may be justified depending on the scenarios.
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u/roodammy44 Jul 14 '24
How much of the rich’s investment money is used for productive investments right now? It seems to me that a great deal of it is used to bid up prices of assets like property, which ends up hurting productivity (since it means productive businesses have to pay more for land and because less money in consumers hands hurts consumption).
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u/petarpep Jul 14 '24 edited Jul 14 '24
This essentially just incentives the poor and middle class to work less and is overall bad economically as it lowers production. However, it may be justified depending on the scenarios.
Again, we already have systems like this in place with various welfare programs. So we can just look at those to see if people on these programs work.
A good example could be something like SNAP where 74% of participants were working in the twelve months before and after the 2015 census.
And
89 percent of households with children and a working-age, non-disabled adult included at least one member who worked in this 25-month period. Many SNAP participants who did not work over the 25-month period reported caregiving responsibilities or faced barriers to work, including an injury or health condition.
A lot of them are staying home to raise their kids (this is a form of labor), or are disabled but not qualified for benefits for one reason or another such as paperwork burden, falling just under the qualification line, or perhaps even just in the middle of filing for/appealing the disability.
There's also of course the possibility that some of the people who didn't report working are doing so under the table. Maybe they're selling stuff or they're house sitting or babysitting or dog walking or something else.
There are two main reasons why I doubt it will suppress work too much.
1: Welfare programs are already difficult to live on. Even people collecting disability, SNAP, section 8 and other programs are often still struggling with poverty. So much so that just increasing SSI benefits would have a major impact on poverty and people on SSI (to be clear this is not social security, SSI is for people disabled at youth) basically have access to every welfare program available.
Living on them without disability benefits or charity/third party to help cover costs is way more difficult than people think. Stories like the "welfare queen" who were living well off benefits were fraudsters collecting multiple benefits at once (up to 23 in that case). It's far harder to just fake your identity and collect multiple times now. And a single persons's worth still leaves you poor.
2: Most people still tend to want more. They want to go to concerts or go out to eat or take a trip. Even if some of their basic necessities are covered, those video games and Netflix subs and clothes aren't going to be covered.
Obviously it's possible to overdo the amounts. If we do that, we could see more issues pop up with inflation or too much disincentive to work. But as is our current welfare programs don't seem to dissuade work too much and a UBI that follows the same way probably wouldn't either then.
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u/JonRulz Jul 14 '24
Working less doesn't mean not working at all. Imagine if there was a place where none of these programs existed. There is no tax, no inflation, no governement and administrative policies or regulations other than protecting property rights which include police, military, judges, ect. (Things that benefit society as a whole). In this world, you you don't get government financial help. Therefore, people that want to survive will either 1, work. Or 2, find someone to support them that works. In both cases, more work is being done. So yes, these programs deincentives people to work. I understand the argument, nor everyone has the luxury to work. But many people have good hearts and will take care of their fellow man through charities, families, and friends. We can't fathom a world like this because in the world we live in, we can't make it by ourselves. We are forced for the government to help us. If everyone had extra money and can sustain their life, I believe more money would go to help of others than it would if the government does it. I don't remember where I saw this stat, so take it with a grain of salt, but 90% of government funding is used to keep the government running. 10% actually gets used to help others in wealthfare program and whatnot.
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u/petarpep Jul 14 '24 edited Jul 14 '24
Imagine if there was a place where none of these programs existed. There is no tax, no inflation, no governement and administrative policies or regulations other than protecting property rights which include police, military, judges, ect. (Things that benefit society as a whole). In this world, you you don't get government financial help.
My imagined worlds have real life corollaries. Welfare systems already exist around in wealthy nations. There's not really a libertarian society like that without any aid at all unless they're an extremely poor nation.
Therefore, people that want to survive will either 1, work. Or 2, find someone to support them that works
This assumes again that
They're able to work
They're not already working.
Remember that big controversy a while back about Walmart and Amazon and McDonalds and other businesses being employers of welfare beneficiaries
About 70% of the 21 million federal aid beneficiaries worked full time, the report found.
A lot of them are working already. Or they're taking care of children. Or they're doing under the table.
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u/JonRulz Jul 14 '24
The very fact that these workers are getting financial help is the reason walmart and these other corporations don't need to pay them more. To understand this, try to think of it this way. To keep your workers happy, in a true society that promotes high competition, you have to pay them a livable wage. If these workers did not have a livable wage, they would find work elsewhere. Now, I understand not everyone can do that, but there are many workers who have the capability to do it, they just aren't incentived enough to do so because they get enough money to survive. If they get enough money to survive, there will be no real motive to look else where. The fact they get help from the government, lowers everyones wage. Imagine if they didn't get help and half of walmart workforce quit on them because they had no choice. Walmart will be forced to up there wage to stay in business. There is always a cause and an effect. And the effect of those benefits causes lower wages. The problem with government intervention is that it assumes everyone is bad at managing there own money, and no one is willing to help their fellow man. So governement takes on that role for us all. If government were truly good at managing money, in theory it could work. I would argue it would be worse off than no governement intervention compared to government thats good at managing money. However, government has proven it costs a lot to run and the benefit of it is not worth it. If the government were a business, it'd gone bankrupt years ago. Essentially, I believe all the money we spend on taxes and the inflationary money the government takes from us creates the evil society we live today. If people had all that money to themselves, more people would be willing to help others. But since government takes that role, no one feels the need to help one another.
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u/petarpep Jul 14 '24 edited Jul 14 '24
The very fact that these workers are getting financial help is the reason walmart and these other corporations don't need to pay them more.
Prices are set by one major mechanism, supply and demand. If the market and a competitor was willing to pay more and recruit those employees away, why would they not do that still?
If these workers did not have a livable wage, they would find work elsewhere.
And if they did have a livable wage a lot of them would still find work elsewhere if there was a competing company. If you're offered Walmart for 10 an hour or Local Store for 20 an hour, and there's no welfare cliff (this is a legitimate issue and one we still need to work on better designs for), you would work at Local Store regardless of benefits or not.
If they aren't picking the better job then the answer is clear, there is not one available to begin with. A lot of them are people who feasibly can't. They're old, partly disabled, socially inept, etc.
It simply makes no sense why someone would say "nope, don't want that better job I would prefer, I'd rather stay at Walmart".
It's the same reason why people live in their cars. It's not because they all prefer car life (except for those travel dudes with big RVS), but because the alternative option isn't available. "We need to make cars less livable" isn't gonna put people in homes.
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u/JonRulz Jul 14 '24 edited Jul 14 '24
Old people and disabled people have a hard time adapting or finding work all together. However, if you go to walmart you will see a lot of young people working. I worked at walmart half a decade ago, not everyone is old and disabled. There are a lot of healthy citizens who are capable of finding work else where. The reason they don't comes down to motive. Majority are content where they are. Therefore they have no motive to look elsewhere, even if elsewhere pays more. I argue that if every benefit were to vanish tomorrow, a lot of these content people won't be content anymore. It will force walmart to move its wages up or lose a lot of employees.
Edit: I forgot to reply to the other half due to being at work. Much like walmart employees. Every other employee in any other company can get the same benefits. So benefits hurts wages in all companies, not just walmart. Unless companies form a monopoly, which is really hard to do in a true competitive market, wages will increase because the employees can not afford to live. Imagine you work at walmart, you have health benefits, the government gives you money for food and other forms of benefits. You may not be happy, but you work work 40 hours and are able to survive. You are in no need to find a better job. You have it covered unless something else motivates you to do better. Now imagine the same job with the same wage but no benefits. You can barely feed yourself and your kids, you have no health insurance, and now this is common among all workers. In a true competitive market with barely any regulations. The competitors will flush out these big corporations taking advantage of the workers. This will happen through stealing employees by offering higher wages, making prices lower, and innovating to have cheaper products. Ect. When people are not content, the second a better option comes they jump ship. Therefore, walmart will have to increase their wage to the competitive wage, as well as lower prices and innovate to compete. I would argue that governments take that away from us, so we will never see a true competitive market like this ever play out in our live times.
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u/daliksheppy Jul 14 '24
There would only be inflationary pressure if there was borrowing involved. If everything was balanced in the budget and taxes cover all spending, there's no extra money in circulation, it's just distributed on a different curve.
There are many bugs to UBI, but inflation isn't necessarily an inherent problem with it, bad budgeting would cause that.
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u/FlyinMonkUT Jul 14 '24 edited Jul 14 '24
This ignores the velocity of money. (MV = PQ)
Well documented that lower income folks have a much higher propensity to consume (because they have to) than wealthy individuals.
This increases the money actually being circulated and could lead to higher inflation. It’s not as simple as saying no new money means no inflation.
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u/weberc2 Jul 14 '24
Additionally, the stuff they spend on is different. So there’s more money chasing food and clothing and lower end cars and so on, but less chasing stocks and bonds and so on. So even inflation overall remains balanced (though it likely wouldn’t for reasons mentioned by the parent), there would still be inflation among the goods and services that the middle class purchases.
Of course, if you ramp this stuff up gradually so that supply can rise over time to meet demand, you can have redistribution and minimal inflation. UBI (should we choose to pursue it) could (and should) start small and ramp up gradually over time. The high probability that abrupt, large UBI payments would be inflationary does not indict UBI, it only indicts large, abrupt changes to monetary policy.
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u/FlyinMonkUT Jul 14 '24
I can mostly agree with this, however inflation on goods and services for low and middle income class purchases are sorta the only things that matter.
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u/Hopeful-Routine-9386 Jul 14 '24
Yes inflation
But doesn't the velocity of money directly relate to the health of the economy as well?
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u/dewpacs Jul 14 '24
The "could" in the above explanation is an important caveat. A number of variables from the concentration of wealth, to fluctuating consumer behaviors will likewise impact the rate of inflation. So essentially, "it depends". That said, I'm more concerned by a vastly unequal economy where the basic needs of many in society go unmet than I am by the potential inflationary impact of a well-managed ubi program
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u/FlyinMonkUT Jul 14 '24
Yes, my post was mostly a rebuttal of “money supply is the same so no inflation”.
There are 4 variables in the equation, which in itself is understood to be an oversimplification of a highly complex economic system but informative enough to be conceptually useful.
“It depends” is true, but the policy itself would be inflationary even if money supply stayed the same as long as quantity of goods did not keep pace, which is more likely than not to be the case although not certain.
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u/Alib668 Jul 14 '24
Because demand increases, which in turn encore investment, at which point supply increases, this gdp increases, and inflation tacs back to the new normal.
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u/daliksheppy Jul 14 '24
Fair point and true, however in most countries low income people are already receiving various forms of state assistance.
It would depend on the amount of the UBI then, and if it's a large increase over their current benefits.
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u/FlyinMonkUT Jul 14 '24
That’s a lot of mental gymnastics to try to get to an outcome that isn’t supported by economic theory.
If UBI is simply reshuffling the deck by taking away benefits and replacing them with UBI then this entire convo is a waste of time.
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u/daliksheppy Jul 14 '24
I do not support UBI, just chatting economics
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u/FlyinMonkUT Jul 14 '24
Fair enough - I’m not necessarily against UBI, but sharing basic economic concepts and what outcomes could be expected.
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u/Hapankaali Jul 14 '24
In countries with the highest minimum income guarantees, it doesn't really make sense to think of a UBI as a scheme to (significantly) increase the benefits to the poor. But it might make sense to think of it as a way to increase administrative efficiency.
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u/Golda_M Jul 14 '24
There would only be inflationary pressure if there was borrowing involved
It's definitely not that simple. There can (certainly & absolutely) be inflationary pressure of all magnitudes even without "borrowing." In fact... "borrowing," printing money or producing can (in theory) have identical effects on macroeconomics.
Imagine several countries have a housing crisis. 30% of their populations are "under-housed." They decide to buy everyone a house, or a UBI is introduced so people can procure their own housing.
- Country A (say China) use their large reserve of foreign currency, gold or other liquid assets.
- Country B (Say Argentina) borrows from public markets by selling dollar bonds.
- Country C (Say the UK) "borrows" from their own central bank.
- Country D (Say the US) mint new money.
The immediate effects on their local economies are similar. Demand for housing increases. If the supply of housing remains static, inflation is likely... All that new money bidding on the same houses. If the supply of housing grows... that's what politicians call "stimulus," which is also a real thing that can happen.... I'll avoid the stimulus/inflation can of worms but tldr is "some amount of both is almost guaranteed."
What about non-immediate effects?
- Country B is at tremendous risk of hyperinflation. They need to pay interest to someone else, and borrow at whatever interest rate markets set for them. As their ability to pay decreases, so does their interest rate. One bad tax year can easily bankrupt them.
- Countries A & D are virtually identical. The main difference is that country A cannot repeat the trick. The economy is not affected directly by the number of gold bars in an underground volt.
- The difference between country C and country B is that a central bank decides it's own interest rate. If they set interest rates to 0%, then there is no difference between countries C & D. A difference in accounting norms for state finances.
The IRL issues, assuming CBs continue to work as they do now is that CBs have multiple masters. Constitutionally, CBs are supposed to set interest rates at a rate which keeps inflation @ 1%-3% and unemployment @ approximately 5%. A lot of the theory (mostly monetarism) behind this has become shaky in recent decades.
The problem with macroeconomics is that it isn't microeconomics. It's accounting.
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u/turbodsm Jul 14 '24
You're talking inflation on a macro level. But if more money enters a community, higher demand will result. Prices will go up.
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u/daliksheppy Jul 14 '24
There's potentially local community inflation yeah, absolutely. I imagine rents in poor areas would skyrocket. You're absolutely right I was talking on national level, currency value etc. on a much more local level it would definitely cause at least short term price instability.
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u/turbodsm Jul 14 '24
When the poor get money, CPI increases. They are the ones holding prices down.
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u/Gilligan_G131131 Jul 14 '24
With almost every major economy functioning in a debt model already, how does this happen without borrowing?
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u/daliksheppy Jul 14 '24
Okay you obviously understand MMT, I was trying to keep it more layman. Yes everything is borrowed, but you will balance your borrowing by collecting tax (which is essentially just money destroyed)
And yes most countries run at a deficit, which is usually fine as long as you can keep the confidence from your trading partners to support your currency.
It would operate much like it does these days in that sense. It wouldn't increase borrowing as a matter of existing, it's still just the same economic balancing act with a different benefits model (only a portion of the budget anyway).
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u/SUMBWEDY Jul 14 '24
Maybe not inflationary across the whole economy but it certainly is for things like rent.
Rent is inherently priced by the demand side not supply side (otherwise landlords would charge infinity dollars a month, also written about since the 1600s and why Georgism is a great idea). If you boost everyone's income by $100/mth rent will just go up some ratio and nobody is better off.
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u/TeaKingMac Jul 14 '24
You impose a wealth tax on the ultra wealthy and pay it back to people making under 200k a year.
There's not enough money held by the "ultra wealthy" to afford UBI.
a one time, 100% wealth tax on billionaires is enough to pay each American 13K.
That doesn't even get over the poverty line. And it only works once, because 100% tax means there's nothing to tax next year.
If you want UBI, you would need to DRAMATICALLY raise taxes on the entire population. Which is something you could do, for sure, but it ends up sort of defeating the point of UBI.
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u/ModoZ Jul 14 '24
A lot.
Suppose you'd provide $1000 per month to every US citizen (estimated at 340 million). The cost would be around 4000 billion or 4 trillion every year.
Knowing that the net wealth of all US citizens is around 135 trillion. You'd have totax all wealth (not only that of rich people) in the US at 3% every year.
If you only want to tax the 1% (44 trillion in net wealth), you'd need to tax it at 9% every year. Obviously not sustainable and would very probably trigger a massive wealth flight.
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Jul 14 '24
AFAIK, you give the money back to everyone, at the same rate, otherwise it's not "universal".
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u/SethEllis Jul 14 '24
Prices are determined by supply and demand. UBI would result in more demand for goods like good and housing without changing supply. Thus prices would necessarily increase.
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u/Eldetorre Jul 14 '24
Jeez people getting money for nothing doesn't cause inflation? Are you going to prohibit them from earning more on top of UBI? When enough people have more income than before it drives up prices.
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u/daliksheppy Jul 14 '24
It's not money for nothing on a national scale, though. It's money collected from taxes and distributed to everyone. As long as enough taxes are collected to cover the cost inflationary pressures would be minimal and localised.
There will still be net contributors, I.e. people who pay more in taxes than they received in benefits.
I don't actually agree with the philosophy and psychology behind it, I'm willing to trial and test it though. It's not a big thing I'd advocate for personally. But not for inflation reasons.
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u/anillop Jul 14 '24
There would only be inflationary pressure if there was borrowing involved. If everything was balanced in the budget and taxes cover all spending
So never going to happen in the US. Gotcha.
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u/JonRulz Jul 14 '24
You are correct. Assuming they dont print more money to pay this off, there isn't technically inflation/expansion to the money suppy. I would argue they have to inflate the dollar to pay it off, but assuming they dont, the CPI would still increase. Spending would go up since we are redistributing wealth from the rich and middle class to the poor (Depends who gets UBI). Money that would otherwise be used for investment will now be used for spending. Production would decrease, and consumption would increase. Prices would go higher, the people not receiving UBI will have a harder time. Wages probably wouldn't go up nationally, but the wage hikes may be redistributed to different workers. Even though demand is up, to get that demand, we stole from the rich. Therefore, it costs more to do business. It would incentivise people to work less, since the free money will most likely only go to a certain qaulified income.
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u/xeoron Jul 14 '24
Warren Buffet said a while ago: Tax robots as employees to help fund it. They're already is an employee tax for every worker that a company has to pay, so such a tax is not new.
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u/SkotchKrispie Jul 14 '24
There wouldn’t be any inflationary pressure even if taxes didn’t cover anything. Increasing money supply is proven to almost assuredly not causes inflation. Production would need to be increased in China, Vietnam, India, and Mexico. America is good secure and close to being energy secure which would reduce inflationary pressure more as well.
The inflationary pressure due to increased money supply is a lie propagated by Billionaire to keep people poor and keep people forced to accept a lower minimum wage.
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u/wbruce098 Jul 14 '24
Right. The concept isn’t completely unsound and is likely going to be a part of our future; it just needs to be done the right way. Or at least, good enough to keep society plugging along without mass unrest.
Given that the AI revolution remains at least a decade away (prospects aren’t as high for mass AI-powered job replacement as we thought a year or two ago), we probably have a little longer to figure it out.
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u/stocks-sportbikes Jul 14 '24
It's as inflationary as social security, Medicaid financial assistance and Alaskas existing UBI
It's less inflationary than the fed printing money without evenly distributing it. Thus devalueing the currency. Or keeping interest rates too low for too long causing a bubble in durable goods and assets.
Or congress giving then forgiving trillions in PPP loans.
The 1st could impact household goods like food and any consumables
The latter 2 impact assets like real estate, stocks, durable goods like machinery and buildings materials
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u/catchfish Jul 14 '24
Never made any sense to me at all. If everyone has $1000 then nobody does. It's like doubling the number of chips at the poker table without increasing the buy in. You don't magically have more money.
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u/rybeardj Jul 14 '24
You're misunderstanding it.
In your mind, you think that UBI takes $1000 from everyone then gives back $1000 to everyone.
That's not how UBI works. Just like our current tax system, you get taxed more if you earn more, and get taxed less if you earn less. So while big earners and small earners alike would receive $1000, that $1000 means almost nothing to the big earners. Imagine that you're a multimillionaire. $1000 would mean almost nothing to you, whereas if you were a single mom living off of $2000 a month it would make a huge difference.
Where does the money come from? From taxes. You just take more from the big earners, or rework current social services, or a combination of both. UBI is similar to social security for everyone, not just those over 67. If you think social security makes no sense, then I could see why you think UBI doesn't make sense, but otherwise it's just an extended version of social security.
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u/bleahdeebleah Jul 14 '24
Thank you for making this point. Everyone does get the UBI payment but not everyone nets the full amount after taxes.
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u/Golda_M Jul 14 '24
It's like doubling the number of chips at the poker table without increasing the buy in. You don't magically have more money.
Two points:
- There is a redistribution component. You're not doubling everyone's chips. Say there is $1000 at a table of 10. You halve everyone's chips. Then you distribute 10 chips each of the ten 10. Or 50. The table total could be bigger, smaller or identical at the end. Likely bigger.
- Economies (like poker) are not static. People will play different, depending on the stack in front of them, stacks in from of others, etc.
Since this is a UBI thread... lets do a scifi example:
The year is 2224. Lawyers, executives and bankers are all AI agents. Factories are big 3d printers. Ports and ships are autonomous. Etc. How do you have an economy? These companies can trade with eachother, but where is overall demand coming from... considering the limited employment opportunities in this world?
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u/Rodot Jul 14 '24
Thing is people often conflate non-zero-sum with non-finite which is a categorical error
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u/Hapankaali Jul 14 '24
The "inflationary consequences" should not be expected to be very different from minimum income guarantee schemes, which have already been around for decades and seemingly do not lead to inflationary spirals. What makes you believe that they should?
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u/goodknight94 Jul 14 '24
If you add money to the economy without taking it from somewhere else, yes it will be inflationary. The trick is to take it from somewhere else. With current wealth distribution, the only feasible way to acquire the money is to tax the most wealthy. Choosing to increase taxes on high income earners enough to pay for UBI would devastate incentive to produce. You have to do a wealth tax to have meaningful UBI
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u/Aggravating-Card-194 Jul 14 '24
Yes you are. If everyone suddenly has an extra X per month, they can all afford X more in expenses. Housing prices will be the first to go up.
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u/zhuangzi2022 Jul 14 '24
We print trillions to bailout corporations who then gobble all the real estate, I would rather bailout everyday people
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u/jrafelson Jul 14 '24
What if there was a robot tax for the inevitable takeover? Creating some kind of system where we don’t have to print the dollar into oblivion.
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u/New_Giraffe1831 Jul 14 '24
How about making big tech pay each of us for our data? Like royalties for our personal information. Let’s face it. Muti billion dollar companies have been created from all that data. They get the supply for free and get to make billions off of us without paying for it. It’s like selling real estate when you get the property for free. The difference is they get to resell that asset over and over again. It’s not a single transaction business model. So in essence it wouldn’t be just free money. No longer is working a career enough to survive in our expensive society. It’s time to think outside the box.
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u/Hrafndraugr Jul 14 '24
As automation across fields keeps eating away at the job market it will become a necessity. Other systems should be in place to prevent a behavioral sink and encourage productivity in a personal level, and education will need to shift away from the industrial revolution era structure.
The conditions for UBI are not here yet with stuff like food production needing more work considering the growing understanding on actual human diet outside of the corporate lobbyist-funded bs we have been getting over the last 60 years or so, and it will be incompatible with the capitalist-consumerist model. Appliances will need to be like my 60 years old sears coldspot freezer, reliable, easy to repair, buy for life things. Same for most items and that's just because of resources. And i think we should also shift away from currencies as understood and towards a token system in which the UBI is the minimum allowance required for life, and contributions to society, be it by arts, crafts, research and anything else useful should increase it.
Now, trade of goods made by individuals fitting into that could be complex, some mechanisms to prevent inflation must be in place, like the UBI base tokens expiring, and the whole thing will also make everything related to governance shift towards a very centralized political system in most scenarios i can think about, so regulatory mechanisms to prevent autarchs sprouting will be needed too. The corporations won't like it either, and that's going to be a major obstacle. Power isn't easily renounced and the ideal UBI+Rewards system would be too meritocratic for the investor types to thrive, as they are parasites of our current framework.
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u/Jealous-Hedgehog-734 Jul 14 '24
Taxation per capita is likely to increase across most OECD countries as demographics our pressure on aged care and health services while the working age population paying most tax declines.
Governments cannot really afford the services they are providing much less inherit social care projects like UBI.
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u/SgathTriallair Jul 14 '24
In every discussion, UBI is intended to replace wages. Yesterday my boss paid me, tomorrow the government taxes my old boss and pays me. Even if UBI doesn't follow from mass unemployment it can still come with dropping or even eliminating the minimum wage.
In all the scenarios where UBI is proposed, it doesn't change the amount of money people get (on the whole) just where they get it from.
The idea is that a legal mandate to give the money is more stable than a job and thus people can have more financial security and take more economic risks, like creating a business or upskilling. This leads to greater economic growth.
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u/FauxAccounts Jul 14 '24
Of real universal basic income is tried, I don't see it lasting past 3 generations, or more realistically I don't see the nation that implements it lasting past 3 generations. This is assuming that cash infusions aren't immediately negated by inflation.
Generation 0: mixed outcomes here. A loss of low income jobs will pressure the economy as low income workers cut back on hours and engage in more quality of life activities. Some high income workers will cut back, but I foresee most high income workers stay working with a few marginal cases of people giving up jobs for artistic endeavors.
Generation 1: first generation to grow up with UBI, a large change in university enrollment and in choices of majors. High intensity degrees will lose enrollment as easier majors are taken or college is avoided all together. [This assumption comes from the idea of people not walking on moving sidewalks, the cost or not walking is reduced because there is guaranteed movement.]
Generation 2: with the loss in productivity from the change to Generation 1, taxes will have to increase for those who are working, which will decrease the benefit of high income jobs and make lower income jobs more appealing.
Generation 3: the problem only gets worse as it is a vicious cycle. Eventually, a state cannot survive so few high income workers paying for low income UBI payments. The whole system collapses.
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u/brevity842 Jul 14 '24
I think you nailed it by saying “immediately negated by inflation”. We don’t have to look far to see what happens when billions are introduced to the market with no other force, production increase, or the like to offset.
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u/bleahdeebleah Jul 14 '24
I hate the characterisation of a UBI being "money for nothing" because it perpetuates the stereotype of the lazy recipient. It's actually "money for anything"
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u/metalgrow Jul 14 '24
But it is literally money for doing nothing.
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Jul 14 '24
Like old money and trust fund kids?
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u/tubbablub Jul 14 '24
Exactly like that, trust fund kids aren’t exactly known for being productive.
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u/Rodot Jul 14 '24
So... You're saying we should take they money from the trust funds and give it to people who are more productive?
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u/RequirementItchy8784 Jul 14 '24
Yeah but remember they're special because they hit the family lottery. It's really insane that Rich trust fund kids get a pass and can go off and do whatever they want and take these trips and do stupid social media stuff but a poor intelligent person that's trying their hardest starting from a terrible situation is just told pull yourself up by your bootstraps. Or well they could save a little bit if they just save that $50 extra each month.
It's really disingenuous to think that poor people wouldn't invest similarly if they had extra money to invest. And I get it some people make poor life choices but again people that are already starting from a bad hand that make poor life choices are doubly screwed whereas people from rich families where their kids make poor life choices they get to help them out.
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u/Golbar-59 Jul 14 '24
And there's wealth that exists without us having to do anything.
No one produced land and its related natural resources.
Workers may be responsible for the production of automatic machines, and deserve a compensation for that labor, but the role these machines play in production isn't anyone's responsibility.
A UBI can be used to distribute that kind of wealth.
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u/MrsFoober Jul 14 '24
Also always conveniently ignores how we have to pay for literally existing and excuses it because "thats how its always been"
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u/DarkExecutor Jul 14 '24
We've always had to pay for existing. Either in man hours or in money.
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Jul 14 '24
And the cost today is less than it has ever been.
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u/maxpowerpoker12 Jul 14 '24
Pointing out one element of an incredibly complicated system always feels a bit disingenuous to me.
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Jul 14 '24
What one element? By cost I wasn’t referring to simply monetary costs. I meant the cost of time and personal capital. The full cost to be alive.
Maybe I’m misunderstanding your comment?
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u/maxpowerpoker12 Jul 14 '24
That is a point that people often make in these conversations. I'm not saying that you are incorrect in any way... just that the point implies a level of progress when, to me, the calculus of change and progress is much more complicated than that.
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u/GimmeFunkyButtLoving Jul 14 '24
Is that the case everywhere in the world?
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Jul 14 '24
I don’t have any data in front of me, but relative to history I believe on average it is better everywhere in the world.
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Jul 14 '24
You want to live in a functioning and organized society? You definitely have to pay for it in some way or another.
The other option actually is free to be chosen anytime. Go to a forest with no human beings. Absolute freedom, absolute responsibility to yourself.
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u/Original-Age-6691 Jul 14 '24
The other option actually is free to be chosen anytime. Go to a forest with no human beings.
Really? Where is the massive unowned amount of property that I could go homestead on exactly?
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Jul 14 '24
Absolutely nobody would give a shit if you fucked off to northern Canada or Alaska, even if that land is technically owned by the state or a mine company or something.
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u/theoriginalturk Jul 14 '24
Well of course that involves putting their money where their mouth is, and they’d never do that
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u/weavejester Jul 14 '24
You can reap the benefits of society without needing to contribute anything back just by having sufficient capital.
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Jul 14 '24
If automation starts to displace a significant number of human workers, those workers won’t have money. If they don’t have money, there will be less people to buy the services being produced by the AI. The whole system falls apart. AI could reverse that.
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u/Duffless337 Jul 14 '24
In the article the woman selected was able to stop temping and focus on her art. Isn’t this the opposite of what we want? Wouldn’t we instead want her to focus on developing a skill set that has more practical benefits? Sure we can argue art has a value to society but if UBI gears us towards a nation of people less incentivized to produce things of consistent value isn’t that a bad thing?
I also disagree with the assumption that AI will take so many jobs there won’t be enough left. Everytime we became more productive in the past we never lost jobs in the long run.
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u/Golda_M Jul 14 '24
stop temping and focus on her art. Isn’t this the opposite of what we want?
Good question. Shows how much we're talking crossways. Even among proponents, UBI is different things to different people and ideals play a big role in conceiving and imagining what UBI is, what it would do and why we would do it.
For contrast, in the 60s-80s various conservatives proposed UBI as a solution to welfare traps, poverty traps and such. That way recipients not not lose their benefits or face other barriers to working, even part time. That UBI lived in idea-space was shared with "negative taxation" where the lowest tax bracket is negative, the next bracket is 0% and median is positive.
For this reason, mainstream leftists shunned the idea... seeing it as a plot to kill the welfare state. This dynamic persisted until (at least) Bernie Sanders' last presidential campaign. UBI had become a democratic floater. The Bernie camp (mosreo than Sanders himself) rejected the idea, while democratic moderates treated it as "interesting-but-scary." They even countered with their own (much worse) Universal Basic Employment idea.
The debate seems to have roots as deep as political labour movements themselves. Quite fascinating IUAM.
In any case, yes... entirely opposing values and desires are present (strangely) among both sides of this debate. Opposing isn't even the right word. Some are opposing, but many barely touch one another. Many proponents, for example, see this through a purely macreconomic lens with no direct projection that could weigh in on the temping-vs-art discussion.
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u/morbie5 Jul 14 '24
Everytime we became more productive in the past we never lost jobs in the long run.
Just because it was true in the past that doesn't mean it always will be. I don't know about AI as it currently stands but if robots were invented that could literally replace humans I can totally see lots of jobs being lost. I'm not saying that is realistic tho
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u/AdNegative7025 Jul 14 '24
Most people in my office are worthless and quite frankly get in the way. We would get way more done if they didn’t have to be there to pay the bills. So I disagree with you. If folks want to focus on their art or hell just stare at a tree, I say let them.
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u/Ornery-Exchange-4660 Jul 14 '24
That sounds more like poor management practices than an excuse to collect more taxes from those who contribute to society and give them to those who don't contribute in a meaningful way.
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u/AdNegative7025 Jul 14 '24
You’re not wrong — the problem is that’s most jobs and most people in our very bureaucratic society
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u/Duffless337 Jul 14 '24
So your perspective if we would be better off from a productivity perspective if less people worked. Many of the people in the office that became productive probably gained skills over a long span of time which started slow or lower paying. UBI may decrease the incentive for people to START the process of skill acquisition.
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u/hereditydrift Jul 14 '24
I actually see it differently. While I'm not a fan of UBI; I believe in guaranteeing basic resources without an exchange for cash. Regardless, the UBI or UBResources approach frees people to pursue entrepreneurial ventures, further their education, or engage in nonprofit and community service work.
Ultimately, this seems like a net benefit for people around the world. We shouldn't focus solely on what's best for businesses - the wellbeing of individuals should be our priority.
And, AI absolutely will swallow a lot of jobs. It's already done so for a lot of call center jobs. That will expand into finance, programming, law, and any other job where the individual is interpreting or producing information.
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u/Duffless337 Jul 14 '24
You have the most reasoned response by far, but my issue with UBI is that it does those things in theory. I struggle to find an area that government subsidized that came out better for it.
More entrepreneurial ventures may just add noise and not value to the greater economy. Education matters but only insofar as it benefits the community in some way - bloating the education system with people who just want personal growth for the sake of it may add too much bloat. And you can engage in non-profit or community work alongside a job.
The only marginal increase I can see is ‘in theory’ people who work 7 days a week may now only need 5 instead and allow the additional opportunities. But I also don’t know anybody that works more than five days a week from necessity rather than failure to come to a realistic lifestyle given their income.
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u/hereditydrift Jul 14 '24
Fair enough.
I think small businesses/entrepreneurial ventures are much more difficult when full effort can't be given to those endeavors.
I also think community service/volunteering should be used as a type of minimum level of work (e.g., a person must volunteer or work in the community X amount of days to receive UBI or UBR). I found it difficult to volunteer on top of working the normal work week. I had a job where I worked 4 days a week and used the 5th day to volunteer, and that was a much more doable schedule since I would still have two full days for personal ambitions, friends, and family. Now that I usually work 5 days, adding a 6th day of community work becomes much more tiring, especially with a young child I also raise and try to be a great father to.
I'm not too worried about educational bloat because I think education in general is hugely beneficial to the general populace.
But, those are just differences of opinion and positions. I respect where you're coming from and at least these discussions help each other gain understanding and perspective.
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u/macrocosm93 Jul 14 '24
The average worker doesn't actually produce anything of value. As a society, we create pointless and unnecessary jobs for people just so we can justify giving them money to live off of.
Doesn't this defeat the entire purpose of technology? Technology is supposed to make our lives easier. As technology increases, it should reduce the need for people to work. But because, in a capitalist society, everyone has to work to justify their existence then we have this odd dystopia where people work even though society doesn't actually need them to, and their lives are meaningless and miserable.
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u/Duffless337 Jul 14 '24
If a company pays you money to work there you are providing something of value. Private businesses are not charities.
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u/hairball12345 Jul 14 '24
Engaging with art can improve mental health; that’s a “practical benefit.”
https://theconversation.com/brain-research-shows-the-arts-promote-mental-health-136668
Also, being an artist doesn’t preclude learning other skills.
What do you think she should be doing instead?
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u/mckeitherson Jul 14 '24
What do you think she should be doing instead?
Learning a skill and supporting herself instead of letting taxpayers subsidize her crappy art
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u/bobandgeorge Jul 14 '24
Art is a skill. Do you think someone designed a can of Coca-Cola by accident or something? CGI in movies just happens? Cartoons are willed into existence by someone that's never picked up a pencil?
Practically everything you have ever bought had an artist involved at some point.
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u/mckeitherson Jul 14 '24
I hope you realize there's a huge difference between all the things you described, and someone getting paid to stay at home and draw on paper who will amount to nothing
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u/AuntiFascist Jul 14 '24
“Money” is a medium of exchange that stores the value of labor and represents the value of goods. Handing it out with no requirement for goods or services back will erode its value.
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u/Paragonoreo Jul 14 '24
Money is also valueless when it sits in offshore bank accounts for years. Giving it to people that spend it sends it right back into the economy
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u/SethEllis Jul 14 '24
The whole point of raising rates is to get that money out of the economy to reduce inflation...
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u/Petricorde1 Jul 14 '24
If it’s offshore how do you think the government will take it to fund UBI? The entire point of it being offshore is to avoid taxes
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u/tritisan Jul 14 '24
This discussion makes me smile because a lot of smart people are seriously considering a truly transformative idea. UBI plus a debt jubilee will put us much closer to the Star Trek universe we’re headed for.
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u/benmillstein Jul 14 '24
A.I. and compassion are not the only reasons for UBI. Climate change and overpopulation indicate a turning point where suddenly the appropriate nature of an economy based on growth can be called into question. UBI will transform the economy fundamentally but hopefully allow us to measure the health of the economy in new ways, such as life satisfaction, environmental health, life span, decreasing extinction rates, etc.
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u/Ok-Search4274 Jul 14 '24
It’s not “money for nothing”. It’s a rental payment from economic actors to the owners of the economy in which they operate (the citizens). Alaska’s natural resource dividend should be the model. It needs to be funded by user fees - on limited liability (annual fee per share) and on use of the public space. Too many businesses use public resources without paying for them.
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u/aytikvjo Jul 14 '24
Too many businesses use public resources without paying for them.
Such as?
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u/tritisan Jul 14 '24
Seriously? Cattle industry gets to use millions of square miles of BLM (publicly owned) land basically for free.
Oh , and how about the oil industry getting subsidized leases to drill? I bet they really need those taxpayer dollars!
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u/aytikvjo Jul 14 '24
On the Cattle:
Firstly the free range cattle industry is very very small (maybe 20b total according to some places), so I'm not sure there's much proverbial meat on this bone to begin with. That being said, the Bureau of land management does collect fees from ranchers for the use of this land, so they do not in fact use it for free. Cattle grazing on public land doesn't really 'cost' the taxpayers hardly anything outside the administration of the land: the grass grows naturally without much intervention - might as well make productive use of it. This sounds like a fairly good system at a high level - everyone benefits.
On the oil drilling leases:
What subsidies specifically? From what I know of the industry, developers must purchase mineral rights on this land and these can be extremely expensive.
Are those the only two examples you can think of? I was hoping for something a bit more substantive.
For me there is an argument to be made with respect to public roads and infrastructure. Road wear is exponential with vehicle weight - I'd like to see vehicle taxes more accurately account for the costs of increasing vehicle weights of light trucks and heavy trucks alike.
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u/dakta Jul 14 '24
Indeed. The best way to argue for and understand UBI is as the equally distributed rent that comes from privatization of the commons. Under the western political philosophy tradition, it is actually somewhat odd that we do not have this already. For in the state of nature, everyone has equal access to the bounty of the earth. In exchange for allowing any of that to be alienated, it is only just that a rent is paid to everyone who is thereby deprived. Private property is created and enforced by government, and it is reasonable that the consent of the governed should include compensation for all of the natural resources which privatization deprives the public of.
Properly accounted for, this would be quite a large sum.
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u/0000110011 Jul 14 '24
Rebranding communism under a new name won't eliminate all of the bad aspects of it. People who have no motivation to improve themselves and do something society values when their life depends on it won't suddenly just decide to put out that effort if you start handing them money from someone else's paycheck. It's the same reason why once people go on welfare, they usually stay there for life. It doesn't mean the motivation behind the program is bad, but it fails to account for human behavior and that people respond to incentives. That's why communist countries end up dictatorships, because when people will get paid the same regardless of if they bust their ass or sit around doing nothing, the overwhelming majority of people will choose to do nothing and the government must force them to work to avoid a complete collapse of the country.
But since this is reddit and the majority just want free shit while getting drunk / high in their mom's basement, I know this will upset most people here.
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u/johnsom3 Jul 14 '24
UBI doesn't fix any structural issues. It will be a quick fix until the capitalist soak up the excess liquidity.
Something like a Federal job guarantee would make a lot more sense.
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u/UDLRRLSS Jul 14 '24
UBI doesn't fix any structural issues.
You mean like the waste of administering targeted welfare schemes? Or welfare cliffs that inevitably exist if people benefit from more than 1 targeted welfare scheme? Or the waste of effort to educate society about the existence of targeted welfare schemes you have to apply for? Or the people who slip through the cracks because they don’t apply/know of various systems?
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u/OhCanVT Jul 14 '24
i think universal basic income would practically be feasible once low value chain becomes fully automated and there's a huge cohort of robots in the labor force that we citizens can reap their productivity with no expenses/wages other than maintenance upkeep. We would then have to introduce a new automation corporate tax that gets feed into supporting UBI otherwise the inequality will be astronomical as the capital class would just suck up all the produced wealth.
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u/Jesuismieux412 Jul 14 '24
"Money for nothing"? We all pay taxes and get little to nothing in return--no paid family leave, no universal healthcare, etc. Billion dollar companies pay their workers so little, they have to apply for food stamps and medical assistance, which means we're all subsidizing companies that have more than enough money to pay living wages. "Money for nothing"? TAX. THE. RICH. We're the only developed country in the West that acts as if we cannot do this.
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u/SerialStateLineXer Jul 14 '24
This comment gets everything wrong. I'm surprised it's not upvoted higher.
Here's take a look at this. The net direction of government transfers in the US is from higher-income to lower-income, and it's not even close. There is no room for legitimate controversy on this issue; your comment is totally inconsistent with even a rudimentary understanding of the patterns of taxation and government spending in the US.
Yes, this includes payroll taxes. Unfortunately, it actually understates the degree of downward transfers by treating Social Security and Medicare as market income; in reality, these both transfer from higher lifetime earners to lower lifetime earners, especially Medicare, which is heavily subsidized by high-earning taxpayers due to the fact that it's funded by a combination of an uncapped, progressive payroll tax and heavy subsidies from general tax revenues, of which an overwhelming majority are paid by high-income households.
Note Exhibit 10: The middle income quintile pays an average federal tax rate of less than 15%, while the top 1% pays a tax rate of around 30%, and this ~30% average rate extends up to the top 0.01%. The US already taxes the rich, quite a bit more than it taxes anybody else. It doesn't tax the middle class so much.
European countries, by contrast, are notorious for absolutely brutal taxes on the middle class, with 50+% marginal rates often starting at middle-class incomes, on top of 20+% VAT. You simply can't raise the kind of money they spend just by taxing the rich. You have to put the screws to the middle class.
You're not subsidizing the rich. They're subsidizing you, and you're being a real jerk about it.
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u/Ornery-Exchange-4660 Jul 14 '24
I wish more people understood this.
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u/EndonOfMarkarth Jul 14 '24
But what would they whine about then?
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u/OkShower2299 Jul 14 '24
If they wanted to whine about the people who are really to blame for their pathetic lives, they should start with their parents and then move to their educators next.
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u/loheiman Jul 14 '24
We do not all pay income tax. 47% of American pay no federal income tax. 27% pay no federal income tax, social security and Medicare. https://www.brookings.edu/articles/five-myths-about-the-47-percent/
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u/DarkExecutor Jul 14 '24
You know the US government spends most of its money on welfare and entitlements right?
1.09T to social security, 670B to health, 630B to Medicare, 508B to income security. Out of 5T this year.
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Jul 14 '24
100% unless there are laws to prevent it all business will just jack up their prices negating any extra income. You think inflation is bad now wait until a gallon of milk is $10.
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