from Hacker News

Universal Basic Income Is Not Feasible

by ihodes on 4/26/18, 10:23 PM with 103 comments

by icebraining on 4/26/18, 11:18 PM
would require “doubling the personal income tax.” A UBI that pays every American $10,000 a year would cost about $3 trillion
No, it wouldn't. Because if you give an upper middle-class American $10000 and you raise their tax bill by $12000, you neither actually spent $10k on them, nor did you actually increase his effective tax rate by that much.
The idea that an UBI would literally cost the $10k for each person is to not understand basic accounting. Or to be dishonest, I guess.
by Bucephalus355 on 4/26/18, 11:09 PM
Gerald W. Johnson, a journalist who covered The New Deal during the 30’s for the Baltimore Sun, wrote that what angry poor people want is never usually money (or else they would have revolted a long time ago), but hope for a better future for either them or their children. Eric Hoffer, who wrote a book in the 50’s called “True Believer: On The Nature of Mass Movements”, had a similar argument.
UBI is not a long term solution, but I appreciate it being innovative and trying at least. One of the reasons we didn’t get any financial reform in 2008 was that their simply was no other economic system/theory to turn too. Right now, before the next recession, we are developing the theories that will be chosen from once neo-Kynesian economics is shown the door in the years to come.
by arebop on 4/26/18, 10:40 PM
The article confuses me with its enumeration of multiple points of argument that appear to amount to the same thing (UBI isn't feasible "because of the cost"; UBI isn't feasible "because taxes have to be high enough"). Also, it features seemingly contradictory arguments such as those from Feldstein, who says that UBI would require impossible tax increases and also that NIT would be fine.
One argument that isn't contradicted by its proponent in the article is that of Smetters, who says the evidence is that automation replaces some particular jobs, but does not reduce the aggregate labor opportunities for the great majority of people. I don't share this optimism but I can see why those who do would be uninterested in even posing the question of feasibility for a sweeping change such as UBI.
by VikingCoder on 4/26/18, 11:05 PM
Why was the headline modified? The article asks the question, this submission changed the headline to turn it into a statement.
by tomelders on 4/26/18, 11:30 PM
Well the current reality isn’t feasible, but we’re doing it anyway.
No one really knows wether UBI will be a succes or a failure. But then no one knows wether any policy will be a success or a failure, and there will always be supporters and fetractors on either side.
Ultimately though, all that really matters is that government takes action that it believes will make society better. That’s it’s purpose. And if government believes UBI would be a net good, it should do it.
by jasode on 4/26/18, 11:15 PM
Which form and scope of UBI is more common in everyone's mind when people think of "UBI". Is it:
1) UBI is a replacement for the wasteful fragmented welfare programs. The "efficiency" gains by consolidating into UBI will pay for most of it and maybe a modest tax increase to round it out. Whatever _that_ amount is, that's what we call UBI. This would be less than $14k a year. It would be just enough for food, living with roommates, and riding public transportation if the recipient didn't share a car.
or
2) UBI is a minimal and comfortable standard of living (home+car+food) so people don't have to work. The release from the stresses of earning a living will unleash a flurry of productivity in art, science, self-improvement. Society would flourish. This type of UBI is much more expensive... maybe about ~$30k.
Which form of UBI dominates the discussion? If it's the 2nd one, I'd argue that's mathematically impossible to provide.
by flubert on 4/26/18, 11:25 PM
I don't think anyone has to worry about UBI being implemented until someone comes up with a better/more persuasive name. Something like the "Robot Dividend". Compare and constrast: "Social Security" vs. "Wealth transfer from young to old".
by scarmig on 4/26/18, 11:31 PM
> From the point of view of economists, a UBI is not feasible.
Sigh. From the point of view of an economist, not economists generally. Most are open-minded about it, but want to see more evidence and experimentation.
It'd be nice for Wharton to list an author of this article, if merely for the purpose of knowing their qualifications. Why do I get the impression it's some undergrad in journalism who just walked down the hall to the only economist they know?
by qntty on 4/26/18, 11:05 PM
Should be titled "The particular implementations of UBI that I have in mind aren't feasible".
by rayiner on 4/26/18, 11:44 PM
> A UBI that pays every American $10,000 a year would cost about $3 trillion, Smetters says.
That's assuming you provide UBI on top of Social Security. You can reduce the real cost to about $2.1 trillion by making people pick one or the other. And you can raise $2.1 trillion by raising U.S. taxes as percentage of GDP to roughly the level of the Netherlands. Even if you assume GDP will contract somewhat, you can probably do it without raising taxes above that of France.
by transfire on 4/26/18, 11:46 PM
I've worked out the numbers and it is not impossibly expensive. First, you have to understand UBI is not intended to give someone a "comfortable lifestyle" without working. Rather, it's to give someone a "comfortable survival" without working. In other words food, roof and odd necessities.
In my figures I simply pegged the UBI to a part-time (20hrs) minimum wage job. When you subtract all the welfare programs that will be made unnecessary, the remaining cost is well within reach of relatively minor tax increases. (I am particularly partial to a usury tax).
One of the big problems that economists are overlooking with relation to automation of the job market is that excessive government regulation, along with antitrust-worthy corporate practice, has created a huge administrative/bureaucratic burden, and it is from this that most new jobs are being created. In other words, BS work.
Just look at how many administrative employees a doctors' office now has -- and we have to go to more and more specialists too. Meanwhile our actual quality of care has gone down, not up.
Another good example, which I recently learned about, it is against the law for a computer program to generate a medical diagnosis. Heaven forbid that we might not need as many doctors one day.
And the best example of all. The IRS is about to make it mandatory that you get your taxes done by a service provider (personal or by software). So what motivation does the government have tp simplify tax laws after that? None. Just keep making them more complex (so big companies can loophole) and in so doing create more BS jobs.
by TaylorAlexander on 4/26/18, 11:40 PM
My issue with UBI is that it does not in itself advance productivity. My vision for a future where there is enough for everyone and all of that abundance is sufficiently evenly distributed that no one is wanting for basic needs is a future where most of the productive work done in the world is done by machines and those machines are open source. The second part, where most of the machines are open source, is the critical component in my opinion that differentiates my vision from the world I think we will have if we don’t act to change course. (That world being one where proprietary machines are licensed with fees that ensure wealth is concentrated rather than distributed.) With open source productive machines being the basis of economic productivity, all engineering effort would go towards the common good of making those machines more productive. Companies would compete to manufacture the machines better than others, and would have first mover advantage on the new developments they produce. They would overall have a somewhat lower incentive to innovate, but this is offset by the larger incentive to innovate new players would have. More broadly I see intellectual property as a violation of the natural rules, and I see that we could voluntarily stop using intellectual property any time we want.
It is my belief that legislative solutions will always be eventually undermined whereas solutions that bring us productivity cannot later be taken away by legislative bargaining. I also believe than any UBI implemented would always be half hearted in implementation just as minimum wage isn’t actually enough for many people to thrive on.
What do you all think about the way I pose this? Where I claim that open source productive machinery is a viable alternative to UBI as a means of more broadly distributing the wealth of increased productivity?
by shireboy on 4/26/18, 11:17 PM
One thing I don't see addressed here or in research on the topic is the macroeconomic impact. Would a UBI cause inflation or other mechanisms to make up the difference in prices? For example, if everybody received $1000/mo would candybars eventually adjust to be $1001? This seems like something that small-scale experiments would be unable to discern.
by hexane360 on 4/26/18, 11:27 PM
>Conservative economists do not like it because it would harm economic growth, he adds.
This is almost guaranteed not to be the case. For this to be true, the marginal propensity to consume of rich people would have to be higher than the MPC of poor people.
>"The evidence is that robotics is a labor complement and is increasing skilled wages. While robotics are replacing some lower-skilled jobs, the most efficient response is to not kill the golden goose but to make sure we have job training programs that are effective in increasing skills."
Again, this assumes that UBI "kills the golden goose", which is exactly what neoliberals don't want to do.
>“I find it very hard to envision political support in this country for that kind of radical increase in taxation.”
This is an argument about whether UBI is a realistic proposal, not about whether it's a "good idea" (the article's stated title).
>"Instead of a UBI to help the poor, Feldstein recommends the “negative income tax” plan"
How functionally different is a NIT from UBI? It seems like the author is trying to equate Feldstein's and Smetter's positions when they're actually very different.
>Benjamin Lockwood (sic) favors the idea of offering a guaranteed basic income, which he says is a better term than UBI.
Huh. So now your argument is just against the name UBI, not the policy itself.
by DonbunEf7 on 4/26/18, 11:09 PM
Disregard feelings, acquire evidence. There is only one concrete numeric analysis among all quoted objections, and it concedes that raising taxes would be sufficient to balance the books, at least in the USA.
by whataretensors on 4/27/18, 12:46 AM
UBI might be able to happen on a blockchain by taking a percentage of the rewards and sharing it.
One problem facing such a system would be sybil attacks. POS systems avoid this by weighting in regards to coin ownership, but in a UBI chain you would not want this since the whole point is to give to people equally.
by spyckie2 on 4/27/18, 3:45 AM
One of the arguments against UBI from a moral point of view (ignoring feasibility arguments) is that people will become lazy because they don't need to work to survive and lead to economic stagnation. It's kind of a throw back to the communist / capitalist arguments of the previous era.
While this is somewhat true - there is a subset of the population that would prefer not working, UBI would also unlock the economic potential of another subset of the population who, due to debt, poor living, lack of opportunities, cannot afford to invest in themselves even though they desire to do so.
Revisiting communism as seen in its historical implementation, what communism did was replace opportunity with equality. UBI appears to have no such fantasies, and just give everyone more money. People who have the desire to make a lot of money, utilize their skills to make an impact, get good at things, contribute, and grow, will not have any of that taken away from them, but will get a larger platform for them to do so.
In this generation, investment is becoming the standard track for improvement, similar to college in the previous generation. It's seen as the way to grow your income, value, assets, and lifestyle. While investment is traditionally seen as stocks and asset collection, it's amazing what slight amounts of money can do to free up time. For instance, investing in laundry services, if you use your time well, can be a great investment (although, if you invest in laundry services and then use the time to play video games, you're probably the other subset of the population).
Tracing back to my original point, there's definitely a tradeoff argument to make. Is unlocking the potential of some worth it, knowing that the money will be wasted by others? At what ratio is this acceptable?
by VikingCoder on 4/26/18, 11:08 PM
This article makes the claim:
“Thoughtful liberals and conservatives trained in economics are almost universally against the idea.” –Kent Smetters
Another article makes a different claim:
"Top Economists Endorse Universal Basic Income"
https://www.forbes.com/sites/francescoppola/2017/08/31/top-e...
So is Kent Smetters wrong, or is Forbes citing people who are not actually "top economists", or maybe not even "trained in economics"?
by dandare on 4/26/18, 11:05 PM
Can you give me feedback to my argument about UBI?
https://www.lucidchart.com/documents/view/87d3102c-5b89-4001...
by ggm on 4/26/18, 11:15 PM
My primary concern is that most people in the margins depend on rent, and shopping locally because the cost of ownership of home, and transport to bigger (cheaper) shops is above their threshold. They're trapped in the locality of poverty.
Which immediately makes them prey to being exploited by inflation of costs, prices, to match the UBI guaranteed income.
TL;DR what stops a landlord and local shopkeeper increasing prices until the UBI is drained?
by NPMaxwell on 4/26/18, 11:23 PM
Weird article: No author.
by jadedhacker on 4/26/18, 11:15 PM
Why UBI is difficult to even make desirable: https://www.jacobinmag.com/2016/01/universal-basic-income-sw...
Alternative idea, a universal job guarantee: https://dsa-lsc.org/2017/09/30/why-socialist-job-guarantees-...
I'm still learning about this other take as UBI seems prima facie a good thing, but there are a number of severe flaws in the idea.