I think well before we consider universal basic income, we should consider universal basic services. Many services are already highly regulated and naturally somewhat difficult to exploit.
Healthcare is the obvious one. It's not like you can get a surgery and then resell it to exploit the system. (You could, of course, exploit things like pain medication, but overall healthcare is not expoitation-friendly.)
Some amount of water, electricity, Internet access, and some amount of food are other good candidates. (Shelter is a much harder problem to solve and one where I think going through money is probably a better approach.)
I'd much rather see every person be given a reasonable amount of food, water, electricity, Internet access, and good healtcare. That is almost enough to lift people out of poverty and give them enough safety and security to enable them to live healthy, successful lives.
Then maybe see if it makes sense to provide money too. But my hunch is that UBI itself isn't a great solution. You can think of it effectively as a negative tax rate for the poor. The UBI has to be paid for by other taxes, so at some income/wealth level you will be breaking even and above that you will be paying for the UBI for people under.
I think that structure is perfectly fine for moral reasons, but looking at it from that perspective, it's not clear to me how simply having a relatively minor negative tax rate will solve the systemic problems faced by the poor. Getting a check for a hundred bucks every month isn't going to fix everything if you break your back and need a million dollars in healthcare.
What people need to thrive is security the knowledge that if unfortunate events outside of their control happen, that they will be helped to the degree that society is able. If you know you can be made bankrupt if you get sick, or your access to water can be shut off if someone robs you, then you are "poor" in all of the ways that subjectively matter.
The problem with declaring "universal basic X" is that once the "base" level gets set it gets very hard to reduce the baseline. We see this in countries that use fuel subsidies and are now trying to withdraw them because they are too expensive, and same goes for food.
For example; universal basic water in Arizona might have the adverse effect of incentivizing greater water consumption. Universal basic fuel can incentivize wasteful fuel usage, and so forth.
In countries that provide basic rations, there are absolutely massive problems with people illegally siphoning subsidized food, water, and electricity and reselling in black markets or other countries with unsubsidized goods for profit. (Haven't heard of it for Internet or healthcare, but where there's a will there could be a way.)
> The problem with declaring "universal basic X" is that once the "base" level gets set it gets very hard to reduce the baseline.
You say that like it's a bad thing. But the fundamental premise of human progress should be that the baseline for all people gradually goes up over time. If anything, I consider it a feature that it becomes hard to lower a baseline once it's entrenched. That makes it harder for a powerful minority to take over and then deliberately leave the poor behind by taking away services from them.
> For example; universal basic water in Arizona might have the adverse effect of incentivizing greater water consumption.
This is a great example. I consider "basic" to be an important word in the term. The baseline level should be set such that if everyone consumes the resource at that level, then we are OK with that. A universal basic water that gave everyone in Arizona 1,000 gallons per day would probably be a bad choice.
> In countries that provide basic rations, there are absolutely massive problems with people illegally siphoning subsidized food, water, and electricity and reselling in black markets or other countries with unsubsidized goods for profit.
I see that as partly a problem of those countries being woefully deficient in some other critical resource. There must be some resource they need more than food that makes it worth giving up the ration on the black market in order to be able to afford it. Like many systems, a system like universal basic services can't work in isolation. It must be designed in the holistic context of its participants.
Also, of course, any system like this does need to have enforcement. At scale, some fraction of participants will be bad actors and the system has to be designed with that in mind.
(I accept that one of the good things about about UBI versus providing services directly is that money is much more liquid than services, so participants can more easily rebalance as needed to keep the system in harmony.)
Healthcare is reasonable, but the right way to provide people food is to give them money. Otherwise, you can't possibly provide a useful service.
People choose to spend more or less on food, eat different things, etc. If I want to spend a lot on food, that's my choice, but I should give up something else. Or if I decide to eat rice and lentils multiple times a week, I should be able to save money.
Even more important than fairness is just practicality. There's a huge amount of infrastructure dedicated to people going to stores/restaurants to buy food in the manner they see fit.
> People choose to spend more or less on food, eat different things, etc.
Don't overlook the basic part in the term. The goal is not to provide all the food that everyone wants to eat. It would be to provide basic access to the baseline food needed to be healthy and functioning.
If you want more than that, great. Now you have an incentive to work. That's good, because we must incentivize people to be productive members of society otherwise the whole system collapses.
The intent with providing basic services or income is not to lower the total productive output of a society by removing incentives to work. Its to raise the total productivity by removing the inefficiencies caused when people are too poor, unhealthy, or afraid to work hard or be entrepreneurial.
I get the premise, and agree that UBI should leave people with an incentive to work. Still, there are pretty divergent needs, and I think money is best.
In the latter two years of grad school, my wife and I ate very cheaply. I was always at home or at the office with a fridge and microwave, had time to make bread and things like that. But there are working poor people work places where that's not easy to do, and so they end up spending a good bit more on food.
It's bin-packing. If people have different needs, making each bin big enough for all of them is gonna cost more than giving them money that they can move between their various bins.
Why are food stamps (but universal, not means-tested) not a good solution?
They allow basics to have controlled pricing, and increased availability, while preventing abuse of the system (ie, alcohol purchases).
Having dispensaries (or dispensary-specific items in a general store) where you can use your food stamp money would leverage a working system we have now.
Food stamps generally do not allow purchasing hot food or a wide variety of foods that are not considered essential (there is some variation in policies, however). Remove those restrictions, and it would be better.
You would still have the problem that it wouldn't actually provide food for everyone or some people would end up losing the money because they're frugal.
What about people who are addicted (huge problem in the US)? If we give them money, they will spend it on drugs/alcohol/etc. and will still need to be taken care of.
So while food stamps (universal or need based) may not be a perfect solution (selling food stamps for drug money is not unheard of), it is still better, because it makes misappropriating the help provided more difficult.
There will always be a segment of the population who will take the benefit and use it to make themselves worse off.
But it doesn't matter because far more people will use it for good things like feeding and clothing their families.
On balance, that's better than what we do now, which is that the addicts still abuse substances, but many who are not addicts struggle to provide for their families.
The point of UBI is to reduce overhead. America’s subsidies for ‘low cost’ housing in cities is far more expensive than cheap housing elsewhere. Someone just given money is going to try and maximize it’s use, where people running programs have their own incentives.
> What people need to thrive is security the knowledge that if unfortunate events outside of their control happen, that they will be helped to the degree that society is able
I don't know if I believe this. It's unpopular, but I think being completely secure may have some negatives. For example, drawing upon my own life experiences, I found it hard to find motivation to be productive when I was completely secure in all my needs. I ended up playing a lot of video games and watching a lot of anime. However, once I lost my training slot in the Air Force and it looked like my cushy military job was no longer guaranteed, it lit a fire under my butt and I was highly motivated to start sharpening my computer industry skills, doing side projects, etc. in case it didn't work out and I had to find a "real job" (and it didn't work out).
We didn't need perfect social security to thrive historically. I don't see evidence of people in EU countries with tons of social services thriving.
Historically, all we needed to thrive was the promise that hard work, creativity, or both, would be proportionally rewarded. Somewhere along the way we've lost this (or at least part of it). We should work to bring that back, and provide enough social services to help people become self-reliant (if they aren't already).
>it lit a fire under my butt and I was highly motivated to start sharpening my computer industry skills, doing side projects, etc. in case it didn't work out and I had to find a "real job" (and it didn't work out).
I don't know if that will fit a lot of people's idea of thriving (it's highly personal). That's really survival skills so you don't end up homeless.
Some really do thrive on chaos, uncertainty, and not being comfortable though. It becomes a real challenge for them and they feel good when they overcome the adversity.
Others don't need that, they can improve themselves for the sake of improving. Chaos and uncertainty keep them from focusing on improving. People who can sit quietly and do math or programming or whatever and just learn.
> Others don't need that, they can improve themselves for the sake of improving. Chaos and uncertainty keep them from focusing on improving.
So the question is, what % of people are like that, and what percentage are like me (complete security I didn't really have to work for robbed my motivation). If only a small % of people become more productive in free complete security, and the majority become less productive under free complete security... is free complete security still worth it?
Let's say that you failed to gain the skills necessary get a job back then. Would you prefer the worst case scenario of having UBI vs not having UBI? Do we subject some people to homelessness to keep other people motivated?
My thoughts are those people can find something else to drive them. I bet at some point you will likely get bored or depressed of simply playing video games and watching anime all day and you'll seek out challenges for yourself.
Your viewpoint is "unpopular" because it's entirely anecdotal and survivor bias (you're posting here indicates you are at least not in a pure survival state).
Taking one's "common sense" anecdotes and applying them to society as a whole is where things get problematic. For the latter you need data and analysis to guide you as well as common sense.
UBI is an unproven pie-in-the-sky pipe dream with no strong evidence in its favor (since it has never been adopted, at scale, by a nation or city-state). All of the UBI studies and experiments are highly controlled, small scale, and don't take into account human behavior that happen in real life (greed). Let's see some UBI experiments that fail for once by telling the participants to take advantage of each other however they can, richest man at the end wins.
Shouldn't that make UBI unpopular as well? Anecdotal evidence is better than no evidence.
As in many things in life, the sweet spot is somewhere in the middle and not at the extreme ends.
People need enough risk of negative consequences to encourage them to make wise decisions. But they also need enough security (especially in things outside of their control) in order to be able to prioritize long-term goals over short-term ones.
> Historically, all we needed to thrive was the promise that hard work, creativity, or both, would be proportionally rewarded.
Well, a "cushy military job" isn't really a place where hard work and creativity are rewarded. I'd regard that as a more plausible cause for that lack of motivation, as opposed to simply being secure in one's basic needs.
I generally think that people are pretty good at spending money on necessities, which may not be the necessities that others have or want. Universal basic services will likely mismatch resources with demand or need, and will thus be inefficient. A basic income is flexible and lets individuals choose where to use that resource. As a rapper once alluded, foodstamps don't buy diapers.
> I generally think that people are pretty good at spending money on necessities
There is actually a wealth of data that shows that poverty changes how brains functions and interferes with long term planning.
> As a rapper once alluded, foodstamps don't buy diapers.
True, but that's probably mostly a consequence of the fact that food stamps were created by the Department of Agriculture partially to address food production surpluses.
There is also a wealth of data showing government inefficiencies and poor effectiveness with blanket purchase policies. I still contend that the poorer will make better choices than a top-down provisioning system.
Governments that centrally plan all the basic necessities you outline are terrible at all of them. Democide tends to happen as government collects more power in the process.
Letting government give a basic income and the private sector filling supply is a much more reasonable solution.
Let’s a free market exist to satisfy demand while recognizing the end of jobs is about here.
I think it's pretty hard to argue that private companies are good and ethical at operating natural monopolies. History and all evidence is not on your side. I'll list a few examples: the California blackouts after electrical deregulation, the Bolivian water crisis after water supplies were privatized, the abuses of companies like Comcast in the US, etc.
Even Adam Smith warned of natural monopolies. Nearly any economist will tell you letting them be private and under-regulated is nuts.
The same with healthcare. Why is every other first world country able to get objectively better health outcomes for less money with universal healthcare? How is our system better?
Are healthcare outcomes worse in the US than other first world countries? Life expectancy is endogenous to variables like diet and exercise. Looking at cancer survival rates, the US is best at some and mediocre at others but other countries are not "objectively better"[0].
Is health expenditure in the US higher than in other countries? Yes, but that is because the US is rich, really rich. If we plot US Real Household Income against healthcare consumption, the US is perfectly inline with global trends[1].
At least in France, the liberalisation of our healthcare system from 2005 to today came with a huge drop in efficiency and increase in price (subsidized ofc, as it is still universal healthcare, but still)[0][1]. Act tarification and the bureaucratic ocntrol of the hospital mean that more time is needed for service chiefs to do paperwork instead of... curing people, and the huge increas in private care use is an indicator of the public health service.
Also as more and more acts were driven off universal healthcare to private insurance (that your employer have to get for you if you don't have one, but that is paid on your salary) was in fact an increase in cost for everyone. Public healthcare administration cost in France is 18% of their budget [2]. Care to guess what private insurance company administration cost is? 27% for swisslife (i don't know if this account for privatised profits or not sadly).
Also nurses and other low-level health workers have low pay compared to the rest of the first world as their salaries did not increase as much as other wokers.
The US is obviously not rich enough to cover all or even most citizens. And a lot of people are not rich enough to avoid bankruptcy because of medical bills.
This isn't true at all. These services are effective in most of Europe and exceptional in Scandinavia. Degradation has increased significantly due to so-called liberalization (privatization) lately with obvious examples in school and healthcare.
If you don’t control things at least a little, things like health care, education and rent will suck up all basic income very quickly. I think a good first step would be universal healthcare, then do something about affordable housing and education.
Cheap or free money tends to get captured by for-profit service providers, who raise their prices accordingly. Example: The upward spiral of for-profit college tuition cost is widely thought to have been driven in large part by the availability of federally-guaranteed student loans and Pell grants. [0]
Federal guaranteed student loans have nothing to do with UBI. It's hard to argue that college fees would have gone up so much if the government just gave a fixed $10000/year loan to every student-age citizen and let them spend it on whatever they want.
In an important way they are opposite: UBI incentivizes price discovery; government backed college loans decentivize it.
> Federal guaranteed student loans have nothing to do with UBI.
If you say so.
> It's hard to argue that college fees would have gone up so much if the government just gave a fixed $10000/year loan to every student-age citizen and let them spend it on whatever they want.
Really? I find it very easy to imagine, since IIRC student loans can be spent not only on tuition but on living expenses — and it seems to be possible to spend it on anything you want, even though you're not supposed to do that. [1] But I'm out of touch in that area, so my experience could be out of date.
The NPR piece that I cited above discussed research indicating that for-profit college tuition costs were strongly influenced by the availability of guaranteed student loans.
> UBI incentivizes price discovery
I suppose that's possible. But analogously, the availability of employer-provided health insurance seems to disincentivize price discovery.
Makes sense. I am not too hopeful that UBI will work. Mega corps are deeply programmed to extract as much as possible from the weakest in society.
Each Corp will start saying things like if we can just get 10 bucks out of that UBI bank account for 50 million people a quarter...and if 50 manage to pull it off we end up back in 2008. Its the same way they sold "low cost housing for all".
What about a natural resources tax into a sovereign fund, combined with a savings/investment account. It can achieve roughly the same thing, without nationalizing every industry. Closer to UBI and food stamps than free services.
Elementary school is effectively universal childcare. It's just you have to make it through the first several years first. Realistically that age is set to when children can be reliably self-sufficient enough that they don't require help with feeding / bathroom things.
Here's a way to think of it: A society succeeds to the degree that it harnesses the maximum of each individual's potential.
The goal then is for a society to remove impediments that prevent someone from reaching their potential. Imagine a potential Einstein born to unfortunately poor parents. One measure of the how well these services are calibrated is the degree that that Einstein is able to reach their potential despite the misfortune of their parents.
Lack of early child care, eduction, transportation and certainly (non-cosmetic) dental care can certainly stifle someone's potential, so those seem like reasonable problems for a just society to aim to address.
You can already sort of see what direction this would go in with education. Just look at student loans. They're available to basically anybody, and as a result you see a growing industry of for-profit colleges and continually rising tuition even at established universities, as people figure out how to extract and siphon off the essentially unlimited free money from the government (actual source of money: the students' future selves).
This is what I would predict would happen with any UBI, more generally: it would just raise the prices of the things that people have to buy until all the money wound up with those who had the capital and the sophistication to capture it. It's not clear you'd even wind up with more of those things you listed, but it is certain you'd pay more for what you did get.
Elimination of the price mechanism eliminates a key way to sort out who truly needs healthcare (or whatever service). Consider a safe elective knee surgery. If you knew it was paid for by the government, you would just sign yourself up for the surgery for even the slightest ache. If there was a copay, you might reconsider unless your pain was actually painful enough to warrant it. Ask any Brit about NHS waiting times and they would understand.
Is access to healthcare important? Yes, but universal healthcare eliminates market forces which makes things efficient. A better way would be a mixture of health saving accounts (and redistributive transfers to such accounts) and subsidizing hospitals (to reflect the fact that healthcare is typically underconsumed).
Further, the government lacks the necessary profit incentive to keep costs low or maintain high standards. Bureaucrats on fixed salaries have no incentive to try harder.
I can agree on the points you made about the system not having any need to be efficient, a government ran system is just not able to be lean - but as far as people just getting whatever they can for the heck of it, that's probably not the case.
Just from personal experience, I don't have copays or much in the way of direct monetary costs (I'm not American) and it's not like I'm out there grabbing free drugs and surgeries. There's a cost other than money to everything, time and effort and rehabilitation and fear of the unknown and so on. As another example my retired parents have messed up knees and hips but they don't feel it warrants the hassle/risk even though it'd not cost them anything to have surgeries, there's more to it than just financial consideration.
Health savings accounts doesn't seem that great though - I don't know if I'll ever have health issues so if I'm socking away $x00/month I'm removing that from the economy betting against my health. Assuming a somewhat capable health care system I'd rather pay that amount to the government in taxes so they can leverage it now for someone else and if my time comes, then I don't have to worry about dollars and cents and what I can afford.
Also if the government had the money from everyone now in the form of taxes instead of individuals socking it away, it'd be more able to purchase equipment and hire doctors well in advance and the local hospital may have better capacity to cater to my needs.
HSAs are just like bank accounts. It reflects a debt owed to you by the govt/bank. The govt/bank doesn’t actually store all the money it owes on hand, it lends it out, makes investments or spends it. That’s why bank panics and bank runs can occur when too many people withdraw their money at once.
> Health savings accounts doesn't seem that great though - I don't know if I'll ever have health issues so if I'm socking away $x00/month I'm removing that from the economy betting against my health.
A pretty safe bet, seeing as most people's health gets quite a bit worse over time.
> Elimination of the price mechanism eliminates a key way to sort out who truly needs healthcare (or whatever service). Consider a safe elective knee surgery. If you knew it was paid for by the government, you would just sign yourself up for the surgery for even the slightest ache. If there was a copay, you might reconsider unless your pain was actually painful enough to warrant it.
Huh? Surgeries don't work like that, they all have significant risks of giving you worse problems than you already have. And even if successful, they're not going to leave you "good as new" or anything like that.
Also, the price mechanism doesn't actually do anything to sort out who "truly needs healthcare," all it does it make it so the wealthy can get whatever they want and the poor can't even get what they need. The actual mechanism for preventing unnecessarily and wasteful medical care is the professional ethics of doctors and the caution of patients.
The problem with price as a mechanism to determine who truly needs a resource is that it excludes people who don't have money. For example, children who would greatly benefit from early therapeutic and/or psychiatric care.
That's where the health savings accounts (HSA) and subsidization comes in. We want people to be able to afford healthcare but not abuse it. So what should we do?
First, require each person to set aside part of their income to a HSA.
Second, top up the values of those HSA's through government transfers for the poor and lower income.
Third, mandate that HSA's can only be used for real healthcare (and not alternative medicine). This way, individuals can afford healthcare but will still take responsibility to not deplete their accounts unnecessarily.
Fourth, (and in response to the NhanN's question) subsidize healthcare providers because healthcare tends to be underconsumed. Why is healthcare underconsumed? When we think about the importance of our own health, we only think of ourselves or our families. But we are valuable to our employer, to our friends. To correct for these positive externalities, some subsidization is essential to bring down those costs.
You are right in that my post didn't address the issues of childcare, let alone genetic diseases, long term conditions etc. where the price mechanism doesn't really make sense or fails. Any healthcare policy will have nuances that I cannot capture in a comment. But for the majority of healthcare consumption, we should really be trying to be as efficient as we can be precisely because of how costly it can be. Throwing away the price mechanism just because it fails for the edge cases is not ideal.
How was $1000/month for anyone over age 18 supposed to be funded?
Without exact details answering such, do voters believe this is more than seeking voter-attention. Are there actual plans of implementation whose economics/numbers work?
The same way we are funding massive corporate bailouts. Sovereign government debt does not work like personal debt, for the simple reason that money can be printed. Fears of inflation in a time like this are completely unwarranted.
edit: Back of the envelope math shows that 1000/month for the US population is about $4 trillion/year. The Fed has pumped more than that into financial markets since this pandemic has started, alone. That is why the S&P is back up to where it was in 2018, despite the world suffering the greatest demand shock in history. Pumping up the financial markets is doing nowhere near the economic good that a UBI would right now.
Why are they completely unwarranted? I'm not an economist, so it's not obvious to me why printing money wouldn't lead create an inflation problem that is worse than the unemployment problem. I would be very interested to know the details that allow us to say such things so confidently.
EDIT: Thanks to those who provided such insightful answers! Very helpful for a layperson like me.
It's completely unwarranted because you essentially can't have inflation in a depression. There isn't enough demand competing for supply to raise prices. That is why governments and central banks usually try to inject money into the economy in lean times, and take it out to keep it from overheating. It's the basis of essentially all macroeconomic management.
The real danger in times of low demand is a deflationary spiral. Those are fiendishly hard to get out of, as the last few decades for Japan have demonstrated.
Inflation is caused by "too many dollars chasing too few goods" not literal money printing. The demand for basic goods as needs are going unmet is actually pretty high. A lot of the printed money would actually go to paying off debt and thus actually destroying money.
I agree that worries of inflation are unwarranted (if anything we are at risk of deflation), but what happens after the economy returns? Aren't we at risk of inflation from all of the new money dumped into the economy?
We'll have to wait and see. If it winds up being too much government spending to avoid inflation, then taxes would have to be raised to cut down the inflation. I don't think this would be such a bad thing, since the income redistribution would be a benefit anyway.
My guess is that it wouldn't cause much inflation, since much of the demand destruction we've seen will be permanent.
US consumer debt is exceptionally high [1]. This was true long before the pandemic. There is plenty of demand for money on the books and the underclass has a long way to catch up even after that.
If inflationary pressures get to high, the Fed will raise the Fed Funds rate, affecting the market interest rates, incentivizing saving, decreasing inflationary pressures.
QE is not magically injecting trillions into the economy. Feds really don’t give a shit about the economy of dinners and rents of the little people. They care about macro employment rates. Shit, we could have a country 100% employment rate and people can’t pay rent, feds would still be patting themselves on the back for a job well done.
That's money that wasn't in the economy before that is now. They are growing their balance sheet with bonds and other assets, and paying for it with money they make.
Isn't that the approach that Venezuela took? To me, any proposal to fund UBI by printing money has to explain why Venezuela failed, and how the new proposal is different in a way that matters.
Venezuela - and, frankly, the rest of the world - is reliant on monetary policy set by outside parties, who can also impose explicit (import/export) and de facto (loan terms) sanctions should their political positioning be undesirable.
How much does the US government subsidize the average US citizen in services, tax rebates, etc.? Is it more or less than what Venezuela offered its citizens in cash payments? I honestly don't know, but I've become more convinced lately that Venezuela's issues have less to do with the efficacy of their policies than they do objections to the nature of their intended distribution of wealth.
The Fed is lending money to prevent a financial crisis, not simply giving it away. Look back at the 2008 crisis and see that the government actually profited significantly from issuing those debts in the long term.
Six of one, half a dozen of the other. The difference is that Fed injections benefit the wealthy, and a UBI benefits the poor most. This is not inflationary, since we are in a depression. As far as devaluing the dollar versus other currencies, everyone else is creating tons of money as well. I'd really welcome a dollar devaluation, actually, to help with our trade deficit.
Let us assume that your concerns about devaluation come true. Let us say that Poor Man has $10,000 and Rich Man has $10,000,000. Devaluation of dollar by 10% means poor man loses $1,000 and Rich man loses $1,000,000.
Poor man typically doesn't have $10,000, what they have is $10,000 and a $200,000 debt.
And not all inflation is created equal. With QE, the printed dollars never make it to Main street, they end up inflating asset prices, while the price of butter stays the same. Whether that's a good thing is an exercise for the reader.
After Yang ran out of money to campaign (sic) and joined CNN, Tulsi Gabbard vowed to continue the UBI efforts (which she had also previously championed) with a proposed bill on March 12th as Direct Coronavirus Pandemic Relief.
The DNC old guard, who mostly ignored Yang and ostracized and smeared Gabbard now seem to be slowly grasping some of these ideas and seeing how they could be tetrised into their status quo without disturbing too much...
In general Andrew intended that proposal to re-orient the conversation about spending priorities and service delivery.
In concrete terms, Andrew proposed a VAT, while also reorganizing existing social welfare programs, of which there are uncountable multitudes, each with highly specific eligibility requirements and screening and fraud machinery, into a more coherent, holistic delivery model that de-prioritized or eliminated eligibility.
His numbers "work" but at that scale they entail such an enormous reworking of federal and state machinery that they're in practical terms a non-starter. Cue up recent conversations about M4A, Obamacare, etc, but on an even larger scale. (disclaimer: I support the idea, but appreciate it is more conceptual value than concrete implementation.)
Right now, Fed govt takes in $3.8 trillion in revenues, mostly taxes, spends $4+ trillion, with two thirds of fiscal dollars going to human-oriented mandatory programs like social security, medicare, medicaid, various federally funded insurance programs, etc and one third going to discretionary, which itself is half military, then half everything else.
A VAT would essentially be a transaction tax that scaled to GDP, so from a model perspective, while GDP is $20T, a VAT would bring in $2T of new revenues, sufficient to begin a conversation about giving $10k/year to 200,000,000 people. In reality- who knows. A VAT would have huge implications and lots and lots of things would change.
A lot of the comments center around credit dollars that the Fed has created- basically large scale loans- to provide transitory liquidity to the financial system. Those comments misunderstand the nature of credit dollars, but IMHO they are not wrong. Credit dollars are a completely different tool than the above fiscal dollars generated from taxes. The US government has essentially infinite credit capacity.
To my eyes credit dollars are both a better and more appropriate funding source for something like UBI, particularly if UBI is tweaked to focus on the liquidity needs of children, women, and those whose current fiscal value is low relative either to future value or to the fiscal value of others. I would love Pelosi to consider that as a concrete option, the politics seem ideal for it.
Even if you took all the money from all the billionaires, and we're assuming frictionless transaction and 100% liquidity, you can't afford it for more than a couple years. The money just runs out.
It's certainly possible to tax the average person $1050 monthly in order to pay that average person $1000 every month, but i really just don't see the point. There are just not enough rich people to transfer $2.5 trillion from annually.
I think your arguing against some position that I am not even suggesting.
You think im saying "if we took the money of billionaires we would have enough to give the whole country 1k/month forever"
Im suggesting that there is enough money when you think in totality so this is merely a question of how comfortable you are with redistribution. Your saying 2.5 trillion annually; ok thats only like 12% of GDP.
It is also completely logical that in the 21 century that only about 10% of value generated is enough to keep everyone fed clothed and sheltered.
You're saying redistribution. Meaning taking money from people with more to give to people with less. (I assume youre not just talking about moving figures around but leaving everyone with the same amount in the end).
I'm saying there are not enough people with more than people less to provide that $12,000 transfer to each person in a way that benefits most people.
If you just took 20% of people making over 150k it would be enough to give 1k a month to the bottom 50%. (and yes i understand this is household)
And this of course is the silly idea that your giving people making 50k a year 12k more for some reason.
This also doesnt include the real money up at the top top end.
It also doesnt include any wealth transfers (scary)
I think (with respect) you just dont realize how much wealth is out there.
Sure but using any definition you want at some point you will be at the end of the distribution that will be contributing not gaining from UBI. This function could be described as a graduated income tax. (Sure on your tax form you might be getting 12k a year in but your getting like 30k going out for UBI)
I think you are describing some system that is sorta some sorta economically inconsistent plan. Everyone gets 1k a month and nobody pays for it doesnt make economic sense.
The people that push UBI dont think in these illogical ways. They know very well that some people will have to pay for it. Some people wont see any gain. And some people will see gain.
Your confused about how this system is a win for everyone. Its not!
Thats what I said at top ; its redistributive.
Yes but there aren't enough people that can contribute to make it cause much sense to implement. The following is a graph distributed by Andrew Yang's campaign. (The most popular proponent of UBI)
Examine that graph and you'll clearly see you're taking $500 billion from net contributers and paying out $1.55 trillion to net beneficiaries. AND THIS IS ACCORDING TO HIS OWN CAMPAIGN. He's literally planning to pay out 3x what he's taking in.
In the fine print he admits that he has to pay for it with "future economic growth", i.e. debt. (you cant pay out cash for something now by hoping the economy grows in the future, it's physically impossible... you need debt to bridge the gap)
But explain to me how taking $1050 from the average person in order to pay $1000 to the average person grows GDP?
The simple fact of the matter is that this cannot be achieved without perhaps scrapping every other social program (Medicare, medicaid, social security) AND raising taxes in addition.
I agree this sounds a bit odd.
So we at least agree that america has a great deal of wealth. Certainly enough that if it really wanted to support its citizens with basic essentials it could. This kind of ubi is welfare or EI with no strings attached. This is a neutral statement about the health of the economy.
The policies of say Yang are not that interesting as for the most part he isnt really talking redistribution and I think he himself is ideologically opposed to it.
How I tend to think about the economy is very much like a game. If you have played say a game like "Banished" (https://store.steampowered.com/app/242920/Banished/) you can see how the economy works without the notions of money/debt/politics. Obviously it doesnt represent the real economy but it comes close to getting a taste. If you send me your Steam ID I will buy you a copy.
Yang proposed to fund it using a 10% VAT, which just about works out to the right amount if you assume you can enforce the VAT on the entire $20T US GDP. I doubt Pelosi has made a concrete funding proposal. (Edit: I answered specifically about Yang's/Pelosi's funding proposals because I thought that was what parent asked -- not sure if I'm crazy or they edited their post.)
> In almost all instances, the readership of this site would count under "the rich" for the purposes of government programs.
However, there are different degrees of "rich" (which, if you want to quibble, can include things like having a yard full of chickens and plenty of time to read [1]). The taxes to pay for expanded social benefits should fall progressively across that whole range.
What’s your definition of “rich” for purposes of funding UBI? How much exactly do you want to tax those rich? How much money do you expect to extract?
These are ideas seldom entertained by UBI proponents, because as soon as they are seriously considered, it becomes clear that there aren’t even nearly enough rich to pay everyone $1000 a month.
Or a tax on natural resources, extracted from America. Instead of a few people owning the mineral rights to everything underneath the country, you make American oil, coal, natural gas, sunlight, wind, nuclear energy something the people own. It's something that already happens in part of America, and it works in Europe. Supplement it with a VAT on luxury items above a certain threshold (yachts, jewelry, property) and a sin tax against sugar and other drugs. Cap it off by replacing agriculture subsidies with the tax break + a "heath discount" on the purchase end of the transaction.
I would even advocate taking it a step further, and replacing HSA's and Social Security with individual savings accounts, a la Singapore. Approved purchases (up to a certain amount of rent, food stamps like foods, medical expenses) qualify for tax free or subsidized purchase (this is mostly psychological, giving people a "discount" vs depositing more money in their account, but it can also steer their behavior.) The government invests a certain amount in each person, and then they can contribute an additional amount from payroll. Segregate the money into two tiers, allow money in the "long term" side of the account to grow through some kind of investment, but minimize or eliminate the choice of how it is invested. Cap per year spending on everything except medical.
Make it closer to a CD than SP500 investment. Everybody gets the same glide, per a single factor such as age or retirement date. Returns are guaranteed. Allow certain penalized/taxed hardship withdrawls.
Plan: America First Sovereign Fund (mineral/luxury/sin tax), deposits into Forced Savings Account at USPS, which includes a tiered account that subtracts the qualifying part of a purchase from Savings Account, the rest gets charged to a Debit/Credit card on file. Allow the reverse, where Chase, WF, BoA, Citi can link their cards to your Savings Account, and automatically deduct qualifying purchases from it. Allow opt in for digital receipt tracking, or receipt scanning a la expensify, so you don't have to maintain records of purchases for disputes. If you use your bank card, you control what records are forwarded and stored in your USPS account.
This does five things. It pays for the program. It gives everybody some individual responsibility to manage their account, while helping them save. It steers their purchases towards healthy. It gives everyone access to a public bank account that is tax exempt. It lets them not have to manage multiple swipes at the register.
Finally, I'd advocate for a hybrid FTC/AG managed consumer protection service. Sort of a Consumer Reports / Wirecutter service on steroids that's easy for everyone to track their purchases, warranties, and to comparison shop with. A single place for product recalls, safety warnings, price comparisons, and information regarding what the best purchase to make is.
I agree with most of your ideas except energy ownership. However, as a Singaporean I have to say that Singapore has HSAs. They are called MediSave accounts and are separate from CPF although both earn interest. CPF is the retirement plan.
My understanding was CPF was the overarching program, Medisave was the HSA, and CPF MS was the IRA. Medisave is part of the overall CPF program.
What part of energy ownership don't you disagree with? I still wasn't advocating against private industry doing the extraction or creation. Just that if you pull something from underground, it gets taxed and benefits everybody, not just the person who bought it from the person who stole it 175 years ago.
I think we are talking at cross-purposes, but I read your comment as suggesting a single account. No one calls our IRA the CPF MS, CPF always refers to the IRA and Medisave is totally separate even if it is partly administered by the CPF board.
What is the purpose of that tax? In public finance, we don't want to unnecessarily distort incentives by picking winners and losers. Taxing natural resource extraction for no good reason chases away companies in those industries and forces them to pursue other businesses, possibly leaving only the most profitable monopolies to survive. If we want to raise revenue, why not just raise VAT, corporate tax, income tax, or property tax more generally.
It's not taxing the company doing the extraction, its taxing the company that owns the mineral rights (the land.) Those may likely be the same thing, but the extraction and refinement itself is still profitable.
It would be akin to the government pulling eminent domain, and saying "the oil under the country belongs to the people, not who owns the deed."
This is basically what Alaska did. They said "if you plunder our natural resources, the profit gets shared with the people whos natural resources you are plundering."
By taking $950/month from the middle-class, $2000/month from the upper-middle-class, and $200 from the lower class. And a couple of million/month from billionaires. (If you can't tax the billionaires, increase all the payments above by $40/month.)
You can't squeeze enough money out of the rich to give the middle class a free ride, there's not quite enough of it, and there's too much of a middle class.
Edit:
If you really want to tax the rich, don't tax their money, tax the things they own. Land value taxes. Taxes on stocks. The purpose of doing this shouldn't be to fund a social program, but to align the prosperity of the nation with their prosperity.
If the government were a passive shareholder in ~40% of the S&P 500, then the nation as a whole would directly benefit from 40% of the returns of capitalism. If we had land value taxes, then the nation would directly benefit from the high cost of land (Which currently is nothing but a cost, and a drag on the economy, and funds all sorts of rent-seeking, unproductive uses of land.) And would skim a good slice of the rent-seeking parts of the economy.
I was typing out a really long response to you with many if...then statements, but then I realized there are too many powerful agencies and institutions that don't want to give up their ability to tax/spend. Medicaid/Medicare, Social Security, IRS, all 50 states etc have defined (and flawed processes) and probably will refuse to give up control over welfare spending or tax revenue generation.
So if you can't completely start from scratch, then ultimately the only source of revenue for UBI would be to cut spending somehow (good luck convincing the Pentagon of that), or to generate additional taxation on businesses (which resulted in them moving crucial facilities to Mexico, Eastern Europe, India, China, etc)
At some point, the USA might be better off if we all have a dividend for every citizen based on our country's profit, like Alaska has currently.
This way it is not a guarantee how much you will make, but it is something.
First off, it doesn't have to be funded. We have a fiat currency. However the extent that new dollars are to be offset because of fear of inflation (not an immediate concern given current deflationary trends), the a partial offset via a VAT tax could work.
Well if it was Andrew Yang's plan, then by a 10% VAT, and other things i.e. a carbon tax. In general, why the taxes are regressive, when paired with the UBI, the product is quite progressive.
But Yang numbers weren’t even close to adding up. Last I checked them, even if you are very optimist and assume that he’ll get exactly as much as he expects in taxes, this wouldn’t fund even half of $1000/mo.
How do you figure? A 10% VAT would bring in $2.1T on the $21T GDP. There are about 200M adults in the US. 200M * $12K is $2.4T, which is certainly in the right ballpark.
Look at countries that actually have VAT. Germany for example has VAT at 19% rate, and it brings 6% of GDP to government budget. For Yang’s plan, he’d need more like 30% VAT. Of course this would be on top of already existing taxes.
Ok, but your previous post said "even if you are very optimist and assume that he’ll get exactly as much as he expects in taxes", so I was operating under that optimistic assumption. Was Yang planning to exempt any part of the GDP from his VAT? Genuine question but I didn't think he was.
Speaking of which, I googled Germany's VAT and it seems there are quite a few exemptions ("food, books, hotel accommodation, cultural services and other goods and services") that only get VATed at 7%, which is much closer to the 6% they apparently collect in practice. But sure, they probably do fail to collect quite a bit of what they theoretically could.
> Was Yang planning to exempt any part of the GDP from his VAT?
A lot of GDP is exempt from VAT by design. It's easiest to see if you look at the expenditure approach to GDP. For a simplest example, government expenditure is effectively exempt from VAT. Exports are VAT-exempt (though it only matters if you export more than import, because imports are subtracted in expenditure approach to GDP calculation). Another part of GDP effectively exempt from VAT is capital goods: when a business buys a piece of equipment, it technically pays VAT on it, but it also gets the same amount they paid as a credit for the VAT due on their own sales. The business gets to "consume" the capital good by utilizing it in production process, but doesn't pay any VAT for it on net.
Thanks, hadn't considered any of that. The exemptions of government expenditures and exports do seem inherent to any VAT, now that you mention them, but I wouldn't think the capital goods sales credit for businesses would necessarily have to be, would it?
"just increase taxes" does not work in the real world (especially here it would be close to doubling taxes) and still does not answer why you would want to hand money to everyone across the board.
It also sounds a little circular: Increase people's taxes so that you can use the income to give money back to them.
Honestly, it costs about the same to implement as Medicare for All, but I would much prefer a UBI.
Imagine if everyone had a catastrophic healthcare plan that was essentially an out-of-pocket maximum of $12,000. And then everyone gets $12,000 a year to spend on healthcare - or anything else.
IMO you can't have long term success for basic income without coupling it with population control measures such as requiring a license to have a baby and/or limiting the number of babies people can have.
I fully support requiring a license to have a baby.
To the extent that we remove the connection between choices and consequences, we harm everyone. This applies in so many ways.
This includes things like lifestyle, including habits, striving to learn & build good family ties, honesty, choosing to pursue education and service, more than just entertainment and pleasure (but with appropriate balance), trustworthiness, avoiding self-destructive behaviors, etc etc. All which greatly affect employability!
But if we make it easily survivable to live on the wrong side of those...what do we encourage? At ever-greater cost to everyone... Think we have a drug problem now?
Some consistently very bad experiences with medicare's and SSA's organizational incompetence (as reflected in ability to provide remotely useful information over many weeks and months, etc) make me definitely not want the federal government to take ever-more resources and control of our economy and lives.
I do believe we are responsible (before God, and if one doesn't believe, then at least to our consciences) to care wisely for one another, and with personal sacrifice to do so -- but not by force.
I also believe, with a fair amount of observation and study among myself and family, that things resembling forcible socialism (or the fed. government solving everyone's problems instead of being strictly limited to its constitutional role) are also harmful to everyone and have been proven many times to be a disastrous failure (Soviets, Venezuela, etc etc).
Charity by force is wrong and foolish, from Christian principle, long historical observation, and (to me at least), logic.
Charitable service done voluntarily by individuals, organizations, families, communities, maybe even states who can then learn from each other what works vs. not, can be wonderful, and I and many others have seen it work in long-term multifaceted practice. But when we force a system on everyone -- bad things happen, in the short and long run.
We can go out and do good and solve problems, by joining with others, using persuasion and fundraising, creating jobs programs (not federal), promoting good ideas, seeing what has worked well elsewhere, but not by forcibly taking control of others people's money (which represents their time and energy, planning and preparation) and thus a loss of freedom for all. Every crisis should not be an excuse to expand control by some, over others.
I have written many more details about this & related subjects at my web site, which is in my profile.
I very much hope we can promote principles over politics, such as: earned trust matters; opportunity, honesty and the Golden Rule matter; charity is important, charity by force is wrong, and breaking the link between choices and consequences harms everyone.
What I keep thinking about all of this is that an open, functioning, well regulated, free market economy (not defending crony-capitalism like we have had) with targeted generous welfare programs is a far better solution than UBI and other massive fiscal interventions/bailouts/helicopter money. Here is my concern and would love to hear any reasoned arguments as to why it is not a problem.
It is a lot of money, and eventually the money comes out of something, be it the increased prices from increased buying power in the market or the loss of buying power due to slippage against inflation driven by government spending debasing the currency. (they are two sids of the same coin i guess)
It wont happen immediately, this is a massive deflationary shock right now, but surely helicopter money will do what is intended and drive inflation eventually undermining the intended effect of UBI in the first place. The economy is dynamic and reflexive, if everyone knows that everyone is getting x amount of money increased demand and information in the market will drive prices quickly higher.
Government planners will eventually seek ways to mitigate this outcome, perhaps by pegging UBI payments to inflation or enacting price controls on say rents or taxes to take money out of circulation perhaps through a VAT. Either way this is the long-run nightmare of more directly managing an economy from the top down. And I fear that it is a road that leads to a far less dynamic, creative and self sustaining economy.
The intended economic foundation for everyone that UBI seeks to provide may prove to be a short term benefit and eventually become a complex game of trying to control a very complex system.
I'm sure we could find the money for this by eliminating existing duplicative or particularly wasteful line items in the fountain of corporate pork, waste and fraud that is the federal budget.
The federal budget was $4.11 trillion in 2018. Quick Googling doesn't give me a number for population over 18, but I'm going to guess >= 200 million (>= 300 million total in the US).
So that's 200M people * (12 months / year) * 1000 / person = 2.4 trillion.
Now is the time to watch closely. When Pelosi got on board healthcare reform, we lost the public option. The chances that her support is a mask for a campaign to water down any potential legislation are high.
>On 12 March 2010, as she prepared for her final push to pass reform legislation, House Speaker Pbbnelosi shut the door on using reconciliation to preserve the public option. While citing the lack of support in the Senate, Pelosi was also aware of the deep concerns that moderates in her caucus had regarding the public option. The narrow vote (219–212) in the House on 21 March 2010 suggests that every possible vote was needed. The House passed the Senate bill (HR 3590) and the reconciliation bill without a public option.
It was included in several House versions of the bill coming out of committee. She didn't fight for it. In fact, she heralded its loss as a win for bipartisanship and her own negotiation campaign.
Not the person you replied to, but there are different narratives for it:
"Democrats didn't want it because their insurance company sponsors didn't want it."
"Democrats didn't fight for it because they needed votes from a few people who wouldn't support it."
I'm partial to the view that they could have motivated those few senators to vote for a public option if they tried. Democrats wave their hands too much on the viability of progressive policy for my taste. Whether the belief in that unviability is genuine or a smokescreen is uncertain.
It could have been passed through reconciliation IIRC. They didn't, in a bid to insulate the final bill against GOP objections to the legislation as a whole.
Healthcare is the obvious one. It's not like you can get a surgery and then resell it to exploit the system. (You could, of course, exploit things like pain medication, but overall healthcare is not expoitation-friendly.)
Some amount of water, electricity, Internet access, and some amount of food are other good candidates. (Shelter is a much harder problem to solve and one where I think going through money is probably a better approach.)
I'd much rather see every person be given a reasonable amount of food, water, electricity, Internet access, and good healtcare. That is almost enough to lift people out of poverty and give them enough safety and security to enable them to live healthy, successful lives.
Then maybe see if it makes sense to provide money too. But my hunch is that UBI itself isn't a great solution. You can think of it effectively as a negative tax rate for the poor. The UBI has to be paid for by other taxes, so at some income/wealth level you will be breaking even and above that you will be paying for the UBI for people under.
I think that structure is perfectly fine for moral reasons, but looking at it from that perspective, it's not clear to me how simply having a relatively minor negative tax rate will solve the systemic problems faced by the poor. Getting a check for a hundred bucks every month isn't going to fix everything if you break your back and need a million dollars in healthcare.
What people need to thrive is security the knowledge that if unfortunate events outside of their control happen, that they will be helped to the degree that society is able. If you know you can be made bankrupt if you get sick, or your access to water can be shut off if someone robs you, then you are "poor" in all of the ways that subjectively matter.