I think that basic income should be temporary though. Like I'm having a hard time imagining a functioning society where a significant portion of the population is on basic income.
People, justifiably, ask how we could possibly pay for all this, but the current US welfare system costs a comparable amount. Moreover, the US financial system is currently set up to allow money inflows to be controlled and to benefit the central banks. A much more sensible and effective method for controlling the velocity of the economy would be to put place monetary inflows into everyone's individual bank accounts, but obviously the people in control aren't going to give up the gravy.
That is not at all how it works. A basic income within reason would almost always be an economic growth mechanism by transferring money from investment class to consumption class. The market for the guaranteed needs of an adopting nations population would be an incredibly large, incredibly stable business center for competition and innovation, and it would increase market participation by eliminating the barrier to entry that is currently made by gated welfare.
Of course we need long run, wide spread, UBI experiments. If all you are talking about is "what if" any reasonable scientist would balk at the conversation. But if you take historic evidence - that giving the poor money makes them, by overwhelming margins, and on average, spend it on their needs in predictable, immediate ways, you would be getting similar economic motivator returns on UBI taxes as you would on some forms of infrastructure.
And by comparison, infrastructure projects also considered a net positive policy because the money made by businesses using your infrastructure vastly eclipses the costs of building and maintaining it. UBI works the same way, by creating stable demand for the necessities of life, and providing the means for a similar force multiplier in people wanting to contribute optimally to the economy by their own judgment than by the will of money in the hands of others for those individuals profit. Because sometimes, making a major stakeholder in a company richer does not mean the greatest source of economic growth for the society as a whole compared to the entrepreneurial potential of every citizen presently bound to that model.
It is confounded by the growing wealth inequality, where the rich find it a valuable asset to buy up these valuable residential buildings that are in demand as a store of value, further diminishing the supply and further exacerbating the problem.
Under a UBI, the market for residential is restored to what it was decades ago when the towns now abandoned in the post-industrial US were populated. There are many times more houses than homeless in the US, but because those homes are located nowhere near a stable income nobody can live in them.
The same applies to food and electricity. We are not at any supply side bounding here, and a UBI makes these makes so incredibly stable and predictable it lets the margins of businesses operating in them get as close to break even as possible because of the certainty metrics now associated with them.
That's not nearly enough to cover it. The top 1% has 38% of the wealth. In 2009 total wealth of US was 55 trillion[1]. That leaves us 20.9T to spread around 315 remaining millions. That's about $66,300 per person from our anti-rich crusade. Not a bad bounty, but that's a one-time prize. How do you intend to fund UBI for anything longer than a trivial amount of time (<5 years) with such a small sum?
1. https://en.wikipedia.org/wiki/Wealth_in_the_United_States#/m...
Capital owners will have increased costs due to taxation, but they'll also have increased demand for their goods and services.
US population: 322 millions US national income: 15.78 trillions $
To give a 10000$ UBI to every person in the US, you need to tax 20.41% of the national income.
We have seen an element of this in the UK where housing benefit largely ended up in the laps of landlords.
And besides, I think a most of the other people doing cool stuff will want cheaper accommodation as well, and over time particular kinds of cool stuff will congregate in different smaller towns.
The move from single-income to double-income families produced far less than a doubled standard of living, but it drove housing prices sky high. It's an interesting natural experiment for what we might see with UBI programs (which act a lot like adding a 'free' wage-earner to each household).
Everyone just magically has enough money to buy 'the basics', but can't use the money for anything else, in fact they never see the total.
What happens the the price of 'the basics' then? What happens when everyone can afford to not be wanting?
There are probably 'better' basics, for example penthouse apartments, but those will are all already above basic, so buying caviar or high end steak might be off the table.
What would happen if demand is just met?
The money would need to be spent anyway, these are basics. Not having spent it would result in what? More crime, more jail time, worse medical outcomes? All of that sounds like expense to the population at large, in the form of emergencies that use social safety nets.
I think the argument for UBI / BIG is that it identifies the root cause of the expenses and attempts to just fix the problem (by, for example, having a basic minimum of housing, or in the case of areas where housing costs too much; causing more housing to be built).
EDIT: To add to this, it's worth pointing out that many corner stores in low income neighborhoods already take advantage of peoples' lack of access to easy transportation to charge unusually high prices for common convenience store items. It's already more expensive to be poor, and I think basic income would just increase the predatory practices that are already happening.
There are plenty of discount stores that are working their way in, e.g. Dollar General, Family Dollar, but they don't have control over the rents either and in alot of larger cities they also are facing opposition from the small businesses that would be out of business since they would have no chance of competing on price at that point.
Whether having every small bodega or other small retail shop replaced by 7-11, Dollar General, Family Dollar, etc. and yet another avenue for access to the middle class shutdown is worth the affordable prices for everyone else is debatable. I can see both sides of this anyways.
I think predatory practices will decrease because people will be voting with their feet, no longer constrained by where they live.
Also not everybody can afford to move.
Basic income is precisely about "afford" part.
Those who won't move will benefit too because landlords will have to work on retention.
This assumes that basic income either includes an allowance for moving or contains enough of a surplus over basic needs that savings can be accumulated.
Economy of scale. Given fixed size of the UBI check, you want to live where services are cheapest. And services will be cheapest in places where more people are serviced together, because that cuts down on distribution costs and other such overheads.
Also, areas where people who have more money than just UBI live, would have higher prices simply by virtue of there being more money in the local economy. This isn't really dissimilar from the existing arrangement, where rich areas are expensive to live in, and so there's natural geographic segregation. But UBI would boost this into high gear.
To clarify, I am a strong proponent of UBI personally. But I think we should be really careful with these kinds of unintended side effects, and try to anticipate and manage them before they cause a bigger mess than what we're trying to address.
Also, have a look at this: https://medium.com/migration-issues/should-a-universal-basic...
Huge retailers today offer worse prices, lower quality and lousy service because they can get away with this, being the only game in town.
At the same time, rent in cities skyrocketed, making low-density and rural places much more affordable.
We now know that economy of scale peters off at some fixed scale.
He can try, but then he'd lose out to competing landlords who don't raise rents as much (or at all). It's like gas stations; owners know that people are willing to buy almost as much gas at $3/gallon as they are at $2. But when the price of oil falls, they can't just keep charging $3, because their competitors will charge less and take all their customers.
Or alternatively the stores could compete by offering better service, in which case people benefit from that.
That wealth can be used to consume the same amount of goods/services that it could have before the redistribution, but now many users get to make those consumption choices instead of one or few.
Yes, this redistribution will have a massive impact on the _pricing_ of different goods and services within an overall market. However, total wealth (ability to consume in aggregate) will remain the same within that market.
But a bit of inflation may not be the worst thing – the current almost-deflation is a lot worse and both private and public debts could finally be lowered. Unfortunately, it's a pretty imprecise mechanisms and there are some people that suffer disproportionally such as those around retirement age getting fixed pensions.
Doesn't that mean that the people who need it the most will just get less than they're getting now?
In other words, are people who are relying on current US welfare systems often using more than (say) 10k/year in total benefits, and giving them 10k in cash instead would actually reduce their total compensation? And if not, then how can the cost of our current welfare systems be comparable to UBI?
The idea is that it reduces administration costs, eliminates poverty traps, and reduces the stigma of unemployment.
I'm no expert in politics, but I think if their benefits were cut they would probably protest, and the protesters would look very sympathetic.
And if we say "OK, we'll have some extra funding for legitimate expenses for the legitimately disabled" you're not going to be able to do away with administration costs.
Why someone that doesn't need a special vehicle would use the subsidy? The normal car fit their needs for the same price! And it's not even accounting the more probable situation in which the subsidy doesn't cover all the cost difference.
They'll have much less work anyway now that nobody is starving or homeless by lack of money, might as well focus.
You would presumably couple it with a heavily progressive income tax, with the result that people higher up on the scale end up paying way more into the system than the basic income check they receive, and people at the bottom pay no tax at all. So the effective amount of welfare is directly linked to one's income or lack thereof.
Also, UBI can replace most welfare, but not all. In particular, your example with the wheelchair - that sort of thing really ought to be covered by health insurance (which should be managed entirely by the government, or at least price-controlled).
This is one of the primary gripes that I have with UBI. You've just described means testing! "So the effective amount of welfare is directly linked to one's income or lack thereof."
We've moved the means testing around a little bit, but it's still there, and it's still open to politicization. The right demands that the threshold between welfare givers / takers be lowered, the left argues it be raised, and we're right back where we started.
There's no way to avoid means testing - the money has to come from somewhere, and this inherently means that some people pay more money into the system than they receive from it.
The point of UBI is to make this whole setup as transparent and low-overhead as possible.
The nice thing about it is that, in theory, because the redistribution is basically regulated by just two knobs (size of the UBI check, and how progressive the taxes are), adjusting them is politically easy, and adjustment range is pretty much unlimited. I'm hopeful that it would result in fewer situations like the ongoing ACA "debate", where right wing just wants to sink it altogether and replace it with something else entirely, because they can't get where they want by tuning it. If we can get this to work, UBI would always be there, but more left-leaning or more right-leaning governments would simply adjust the knobs more or less gradually depending on how much "freeloading" they're okay with.
And smooth adjustments are easier to adapt to, and cause less social upheaval (think of the shock to the society and the economy if Republicans somehow manage to repeal ACA, say, tomorrow...)
Basic income means everyone gets the money they need to survive without having to go through a humiliating application process, and they only have to care about taxes when they start earning money.
Moreover it means the remaining administration is focused on tax fraud, and can prioritise its resources appropriately on the worst offenders, rather than having an agency dedicated to chasing poor people for relatively trivial amounts of money (likely at greater cost than the fraud itself).
In terms of the politics, I think the peace of mind benefits of welfare will be more obvious to the middle class when it's automatic, rather than it being something they could maybe apply for if they get really desperate.
I believe a better solution would be to put automation in the service of people directly, as property of the people. Maybe small communities would be able to combine work with automation to provide for all their necessities. In the future, a few solar panels, 3D-printers and robots could possibly bootstrap a whole community.
Then the role of the government would be to provide the initial technology and to make sure each community has its own bootstrap working in order, not to distribute UBI. People would still have work to do - to supervise automation and work alongside with it, where necessary.
Somehow, control and ownership of the means of production (automation) would need to be divided and spread equally in the population, otherwise, it will just detract from the value of people.
But if we spread automation ownership, then there could be a new level of independence where a community could provide for all its needs internally and perhaps, even desire more autonomy from the state.
When people are desperate for work, and jobs are hard to find, people will put up with all sorts of bullshit from their employer. When people know they'll be okay regardless, they're much more likely to quit when they get treated like shit.
And I suspect for a lot of businesses, the cost of improving working environment may be lower than raising wages. For example, I think "customer is always right" policies cause a lot of employee stress for relatively marginal gains. A less desperate labour force may be willing to take lower wages at a restaurant that lets them tell obnoxious people to GTFO.
(And yes, I understand that companies would rather spend that money on ads rather than taxes... you can replace the ad industry with any other industry we'd be better off without.)
While it's better than letting people starve or get food stamps, you might find a large class of young, unemployed males who have trouble getting interest from potential mates. Historically, that's always been recipe for political unrest.
And even if there's not, if basic income becomes a thing, I'll bet there is large positive status attached to someone demanding your labor. People on basic will be second-class citizens, and there will always be political pressure from the 'working class' to reduce the drain on the tax base.
Poor people in the traditional sense would be able to pursue internships without pay to gain skills because they are underpinned by UB. An option not available today. As an employer I could take on more 'apprentices' on UBI, the contract being that I give them training, give them guidance whilst they work 'for free' until a certain point it becomes worthwhile to pay them above and beyond UBI because they're worth it.
On the other hand, there are always alternative paths to attractiveness, outside of the purely financial. In some sub-cultures, you can be broke as hell, but if, say, you're really good at playing guitar, you can have your pick.
Basic income will allow capitalism as we know it (that is, end users making consumption choices, not an organization making choices for the end user) to continue in a society where production is completely automated.
Supply is automated, but how does the system know what to produce? Well dollars are basically votes for production and basic income is enfranchisement in such a society.
Most importantly, basic income provides a mechanism that can work during the harsh transition from "some highly skilled humans are still needed for production while the majority of people are no longer needed" to "zero humans are needed."